Social media influencers have been critical to the influence and growth of cryptocurrencies around the world. In some cases, billionaires and even celebrities have vouched for cryptocurrencies, with the most famous example being Elon Musk. In fact, Musk has a very long history of influencing crypto prices through his tweets.
However, despite what people might think, these celebrities and influencers are not the best judge of the crypto market. Therefore, it would be very unwise to trust them with any type of financial advice, especially if they take endorsements from said cryptocurrencies. And the chair of the City watchdog agrees with this sentiment.
Charles Randell, chair of the City Watchdog, warned against trusting social media influencers on investment advice. He said that these influencers are usually paid to promote an investment opportunity. They will also usually not disclose important information, the cryptocurrency’s past, or that they are a scam.
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Randell further continued that the influencers play a vital role in Pump and dump schemes. Scammers rely on them to sell the crypto, which will ten allow it to grow. After reaching its necessary conclusion, the scammers will pull the plug on the operation. He shared his thoughts at the Cambridge international symposium on economic crime.
He also brought attention to the fact that Kim Kardashian received an offer to promote a cryptocurrency as well. According to various reports she would be paid to spread the word amongst her 250 million followers about the Ethereum Max Community. The main point of contention for him was the fact that the token only came into existence a month ago.
The chair for the City Watchdog also made his routine warning at the crypto market about greater regulation. More specifically, he raised the possibility that the watchdog will be looking into creating ad trading cryptocurrency in general.
Throughout his speech, the City Watchdog’s chair made a plethora of remarks. One of the most important one was the fact that selling the tokens should also be regulated. Since these tokens can be responsible for a significant amount of harm, it is worth regulating the sellers as well.
Randell believes that since these tokens have not been around for a full financial cycle, they do not know what they are capable of. As he neared the end of his speech, he made a request to all future and current investors. He asked them to do their due diligence before making an investment. Since it can be very difficult to retrieve losses, investors should be very careful when choosing out their preferred cryptocurrency.
Moreover, since they are not regulated, investors cannot make use of the financial Compensation Scheme to recover losses.