Consumers are being lured into cryptocurrency filled with delusions of “immediate riches” by high-profile influencers. People of notoriety such as Kim Kardashian. Now the UK’s financial regulator has sent out a warning in a speech.
Charles Randell, Chair of the Financial Conduct Authority called for regulators to be given greater powers to protect consumers. He said, “if people buy speculative crypto tokens you should be prepared to lose all your money.” He pointed to Kardashian’s recent promotion of a speculative digital token.
She was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by joining the Ethereum Max Community. “This may have been the financial promotion with the single largest audience reach in history,” Randell said.
While Kardashian disclosed that it was “a #AD,” Randell said that she did not have to disclose she was promoting a speculative digital token. The token, created a month before by unknown developers, one of hundreds of such tokens that fill the crypto exchanges.
“These tokens have only been around for a few years, so we haven’t seen what will happen over a full financial cycle,” Randell said. “We simply don’t know when or how this story will end, but as with any new speculation it may not end well.”
The FCA also called on online platforms like Facebook, Microsoft, Twitter and TikTok to join Google by committing to stop promoting advertisements for financial products unless an FCA authorized firm has cleared them.
Kardashian’s publicist and a spokesperson didn’t immediately respond to requests for comment sent via LinkedIn and email. She wasn’t accused of any wrongdoing by Randell.
The FCA doesn’t regulate the types of tokens mentioned by Randell, but it has published a list of unregistered crypto exchanges that it suspects are operating in the UK, to help consumers avoid using them.
Last month, the regulator cracked down on one cryptocurrency trading firm after it failed to provide sufficient information about its business operations, corporate structure and ways that retail consumers used its products.
