Kim Kardashian’s Instagram Post on Cryptocurrency Prompts U.K. Financial Watchdog to React
Head of the Financial Conduct Authority criticizes promotion of EthereumMax token
An Instagram post by Kim Kardashian asking her Instagram followers to join “the Ethereum Max Community” is bringing social media’s role in promoting cryptocurrency into the spotlight.
Charles Randell, head of the U.K.’s Financial Conduct Authority, said Ms. Kardashian’s post might “have been the financial promotion with the single biggest audience reach in history.”
But he criticized the noted ad, saying it wasn’t required to tell followers that EthereumMax was a month-old speculative digital token.
“I can’t say whether this particular token is a scam,” Mr. Randell said in a speech Monday to the Cambridge International Symposium on Economic Crime, according to a copy posted online. “But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote coins that turn out simply not to exist at all.”
A representative for EthereumMax said Ms. Kardashian’s “post was simply intended to raise awareness of the project and its utility.”
“Altcoins [non-Bitcoins] in general are speculative, and EthereumMax is not excluded from this macro truth,” the representative said in an emailed statement. “However, what makes EMAX different is our commitment to transparency and communication.”
The FCA currently has a limited role in registering U.K.-based crypto asset exchanges for anti-money-laundering purposes. Criticism by the FCA, through a speech, of an individual’s actions is somewhat unusual, industry observers said.
But the speech suggests that the FCA is seeking to expand its authority in regulating the growing cryptocurrency sector, and highlighting Kim Kardashian’s case supports that effort, said Jeffrey Alberts, a partner at law firm Pryor Cashman LLP in New York.
“By identifying this type of case, which politicians and voters would be aware of, that increases the chance that they would be given that authority in expanding their regulation,” Mr. Alberts said. The speech indicates that the FCA may be seeking to have authority in protecting investors from speculative tokens, Mr. Alberts added.
Ms. Kardashian, who is known as one of the stars on the reality TV series “Keeping Up With The Kardashians,” didn’t immediately respond to a request for comment on the regulator’s speech.
The speech also can be seen as a warning to British investors, as Mr. Randell said in his speech that around 2.3 million Britons currently hold this type of token, according to Ross Delston, a lawyer specializing in anti-money-laundering issues.
“He was also trying to warn U.K. citizens that investing in these tokens can be, not just speculative, but also outright frauds,” Mr. Delston said.