Bloomberg News recently reported that fake celebrity-endorsed crypto scams have doubled in the UK this year, and on average scammed victims out of $14,540 in stolen value before they realize what happened, which is 65% higher than the average crypto scam theft from the previous year. The article’s source expects celebrity-endorsed crypto scams to increase another 87% next year based on current rising trends.
It is easy to see why celebrity-endorsed crypto scams are increasing in popularity. First, you have tons of real-world celebrities getting into and promoting crypto projects (e.g., cryptocurrencies, exchanges, decentralized finance (DeFi) projects, and non-fungible tokens (NFTs)). Examples include:
- Elon Musk promoting several cryptocurrencies including dogecoin and bitcoin
- Matt Damon sprouting, “Fortune Favors the Brave” in crypto ads during Super Bowl commercials
- Seinfeld’s Larry David saying, “Don’t Miss Out!” in other Super Bowl commercials
- Tom Brady and Gisele Bündchen investing heavy in cryptocurrencies and even buy a stake in a cryptocurrency firm
- Justin Bieber spending $1.3M for a Bored Ape NFT
- Beloved actress Reese Witherspoon buying and promoting NFTs to women
- Quentin Tarantino selling NFTs from his most famous films even into the face of multi-million-dollar lawsuits
Celebrity-endorsed crypto projects make a ton of business sense because much, if not most, of the value of many crypto projects is based solely on building hype and excitement. And the hype money is flowing big time. Crypto organizations are also naming stadiums, giving hundreds of millions to politicians, buying companies, becoming official national currencies, plastering their names across F1 races, and using very trusted and recognizable faces to sell their product.
This is a fact not lost on crypto project scammers. Most crypto project scammers want to heavily advertise the scam and quickly get as many victims as they can to spend or share their cryptocurrency wallet details before the scam is recognized and shutdown. Using fake celebrity endorsements is one way to guarantee that. It can be tricky for potential victims to spot a fraud since the involved celebrity often really, publicly, touted legitimate crypto projects.
Elon Musk Deep Fake
Elon Musk is a good example. He’s frequently endorsing cryptocurrencies on Twitter and having legitimate discussions about it. He’s seen by many as an official crypto spokesperson. One of the trickiest fake celebrity endorsement scams was a deep fake of Elon Musk promoting a crypto scam project. In it, the fake Musk says he is launching a new crypto project and participants can earn 30% return on their investment in three months. It was apparently hacked together using different video snippets of Musk talking about other non-related projects. Musk “warns” viewers at the end of the video that all crypto investments are risky. This was an especially crafty element to add because it made the investment possibility seem more real.
British billionaire, Richard Branson, is also a favorite fake crypto scam focus. It did not hurt scammer’s ability to profit off of Branson’s likeness since Branson really did invest big early on in crypto projects, including this one. Now, according to Bloomberg, Branson’s “stepping up efforts to stop his name from being used in fraudulent crypto schemes.”Unfortunately, celebrities trying to tell us they are not really the ones promoting particular crypto projects is not likely going to scale or work well.
Defenses
So, what will work to defeat crypto scams, whether or not a celebrity appears to be endorsing them?
Educate Yourself and Others
The number one thing any person can do to protect themselves and their organization is to educate themselves and co-workers about the signs of a crypto scam and how to avoid them. If it is too good to be true (i.e., 30% returns, etc.), it is too good to be true. Never be the first to jump on a crypto project bandwagon. Don’t let the fear of missing out (FOMO) make you run into a crypto scam. Most of the stolen value is lost to victims who participated immediately after the project first announced and launched. Waiting hours or a day before participating would have saved most victims as the fraudulent scam becomes discovered, unraveled, and put down.
If you are interested in learning more about crypto projects and scams consider seeing this KnowBe4 webinar on the subject.
Want to Remove All Risk?
Do not get involved with cryptocurrencies, crypto exchanges, DeFi projects, and NFTs. A large percentage of these projects are outright frauds, money grabs, doomed to failure, “crypto winters”, or headed to eventual bankruptcy even without any illegality involved. There are plenty of good projects with the best of intentions and some of those will rise above the frauds, succeed, and become something of lasting value. It is just impossible to figure out which projects will be heroes and which will be zeros right now, and there are currently a lot more over hyped, guaranteed zeros out there.
Only Risk What You Can Afford to Lose
Assume anything you invest in crypto projects can go to $0. Never invest more than you can afford to lose. Even in the regular investment markets (e.g., stocks, bonds, etc.), participants are told to never invest too much in any one asset class. This is especially true of investing in super high risk investment classes, of which crypto projects are definitely one. There are thousands of stories of people who unfortunately lost their entire life savings by investing it all in a failed cryptocurrency project. Do not be one of those sad souls. Invest smartly and conservatively.
Only Do Business with Very Reputable Exchanges and Projects
You can decrease risk by doing business with the most reputable and long-lasting exchanges and projects (although that does not prevent all risk). Use exchanges and marketplaces which care about regulations and following generally accepted finance and investing laws. Avoid projects that promise super high rates of return. Research key players and owners of exchanges and marketplaces. Some are lead by former felons, previously convicted of past financial crimes and scams. It is never a good sign when the leaders of a project have already proven to have bad ethical and criminal issues.
Celebrities Are Not Crypto Experts
Lastly, realize that none of the celebrities promoting crypto projects are crypto or financial experts. Even the best, well-meaning, celebrity is just taking a guess about whether the crypto project they are promoting will succeed or they are simply taking the paycheck and not really even caring. Many celebrities (e.g., Kim Kardashian, Floyd Mayweather, John McAfee, Logan Paul, Pankeeroy, etc.) have been accused, investigated, sued, or arrested for promoting crypto projects without revealing they were also being paid (which is often illegal). But again, even the most well-meaning, sophisticated-crypto, celebrity has no idea if the project they are involved in is a good one and will succeed for participants. No one does, but especially not a celebrity.
Unfortunately, according to the authorities, fraudulent celebrity promotions are on the rise. Treat all celebrity endorsements, whether frauds or not, as nearly worthless. It is almost never right to allow a celebrity endorsement to become the primary reason why you decide to invest in something. That’s good advice you can take to the bank.
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