• The Securities and Exchange Commission and Federal Trade Commission have fined numerous celebrities including Kim Kardashian for failing to disclose financial compensation when endorsing certain cryptocurrencies.
• This lack of oversight negatively impacts ordinary users, who trust influencers as their primary source of investment information.
• Bitget’s managing director Gracy Chen argues the exchange had a duty to act when a crypto influencer began selling his holdings in a project he was promoting.
Influencers’ Influence in Crypto
Love them or hate them, crypto influencers are deeply entrenched in the world of cryptocurrency. Gen Z respondents consider social media their primary source of investing information due to its widespread acceptability as long as it is accompanied by an endorsement with a clear indication of the influencer’s financial interest in the product.
SEC Fines Celebrities
The SEC has charged many celebrities, such as Paul Pierce and Floyd Mayweather Jr., for promoting low-cap tokens without proper disclosure leading to financial losses for the public. Additionally, Paris Hilton endorsed LydianCoin without proper disclaimer and Kim Kardashian was penalized $1.26 million for failing to transparently reveal her financial stake when shilling EthereumMax (EMAX).
Bitget Acted Ethically
Bitget managing director Gracy Chen believes that her exchange had an obligation to take action when a crypto influencer began selling his holdings in a project he was promoting. Due to this incident, Chen asserts that exchanges should become more proactive about protecting investors from unethical behavior by taking measures such as providing greater transparency into transactions and monitoring insider trading activities more closely.
Protecting Investors From Unethical Behavior
Chen suggests that exchanges can better protect investors from unethical behavior by increasing transparency into transactions and monitoring insider trading activities more closely. Additionally, exchanges should be aware of any potential conflicts of interest between influencers and projects they are promoting so they can take appropriate steps if necessary. Furthermore, regulators need to hold all parties involved accountable when improper practices are discovered so that investors can rely on accurate information when making decisions about their investments.
Conclusion
It is essential that both exchanges and regulators take steps to protect investors from unethical behavior by influential figures within the crypto space since consumer trust in these individuals is at an all-time high; however, it is also important for everyone involved to ensure proper disclosure whenever payments are received for promotional activities so that ordinary users do not suffer financially due to misleading endorsements or lack thereof.