American businesswoman and socialite Kim Kardashian was criticized for promoting a cryptocurrency on Instagram.
The criticism came from the head of the Financial Conduct Authority (FDA), the UK’s financial regulator.
Charles Randell said Kardashian “asked his 250 million followers to speculate a cryptocurrency” when promoting an ad for Ethereum Max.
Randell called the coin “a speculative digital token created a month earlier by unknown developers.”
And he accused digital influencers of harboring “quick wealth illusions.”
Randell spoke about the case during the Cambridge International Symposium on Financial Crimes.
The FCA president said Kardashian’s Instagram post, which he pointed out was correctly flagged as an advertisement, may have been “the financial advertising with the greatest public reach in history.”
The token promoted as Ethereum Max should not be confused with the Ethereum cryptocurrency.
“I can’t say if this specific token [Ethereum Max] it’s a scam,” Randell said.
“Social media influencers are routinely paid by scammers to help them pump up and discard new tokens because of sheer speculation. Some influencers promote currencies that just don’t exist,” he said.
The BBC approached Ethereum Max and also Kim Kardashian for comment, but got no response.
Randell said that around 2.3 million Britons currently own cryptocurrencies and that 14% of them also use credit to buy them, “thus increasing exposure to financial losses”.
He said the FCA has repeatedly warned Britons about the risks of holding “speculative tokens” that are not regulated by the FCA or covered by any compensation scheme.
“If you buy them, you must be prepared to lose all your money,” he said.
Randell said there is still room to advise consumers that their investments may not be protected “from the relentless and often deceptive advertising techniques of some encryption businesses.”
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