Charles Randell, the chairman of the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR), has criticized the sponsorship of speculative tokens, as the new crypto token by influencer Kim Kardashian on her Instagram profile last June.
FCA warns on speculative tokens
The FCA chairman made it clear that advertisements for cryptocurrencies and digital assets promoted by celebrities, influencers and others with large social audiences pose a danger to consumers, and can also lead to potential scams.
In his keynote speech on Monday at the Cambridge International Symposium on Economic Crime, Randell discussed the risks of token regulation and the rules that are supposed to protect people from investment fraud and scams, emphasizing precisely this aspect of sponsoring unknown or untrustworthy financial products.
Charles Randell harshly added:
“There is no shortage of stories of people who have lost savings by being lured into the crypto bubble with delusions of quick riches, sometimes after listening to their favourite influencers, ready to betray their fans’ trust for a fee”.
What drew the regulator’s attention was a post published by well-known model Kim Kardashian, in which the influencer encouraged and urged her 250 million followers to invest and speculate on the Ethereum Max token, created on the Ethereum blockchain but in no way to be confused with ether (ETH).
Although the post was marked as an advertisement in accordance with the social platform’s policies, Randell said Kardashian failed to disclose that the token had been created only a month earlier by unknown developers.
Speculative tokens and lack of regulation
It has been regarded as the financial promotion with the widest audience coverage in history.
EthereumMax is an ERC20 token launched with a total supply of 2 quadrillion $eMax, but what proves its unreliability and that the promotion was done without careful analysis, is the fact that since that social post until today it has lost about 75% of its value, in absolute contrast to the rest of the market.
Chairman Charles Randell highlighted the lack of specific regulation for speculative tokens and the powers to effectively oversee and control the online promotion of cryptocurrencies and other digital assets so as to counter the dissemination of harmful and misleading content to inexperienced investors and vulnerable consumers.
The FCA continues its information campaign aimed at investors, especially amateurs, repeatedly warning them of the risk of cryptocurrencies and arguing that investors can potentially lose all their money because the assets are not backed by the UK government’s Financial Services Compensation Scheme.