Celebrity endorsers, influencers, and crypto scams

FBI launches a new unit dedicated to tracking and seizing illicit crypto

Ric Edelman: We all know that there are gimmicks and scams and frauds everywhere throughout the crypto community, just as there are everywhere throughout the stock market and the real estate market. We see scams everywhere. Well, guess what? The Justice Department has now hired its first director of the new national cryptocurrency enforcement team. They established it to respond to the criminal misuse of digital assets. And the FBI is also launching a new unit dedicated to tracking and seizing illicit crypto. The new team is called the Virtual Asset Exploitation Unit, and their goal is to disrupt international criminal networks, disrupt them, not merely prosecute them. And Spain is imposing restrictions. Oh, not on crypto itself. They're fine with crypto. They are imposing restrictions on the influencers, the people who promote crypto. If you're an influencer in Spain and you've got 100,000 followers or more, you're going to have to start notifying the government of your crypto promotions within 10 days.

Ric Edelman: And if you don't, the fine could be as high as $350,000. Why is Spain doing that? Blame Kim Kardashian. She's got 250 million followers. Asked on Instagram last summer, she said, "are you guys into crypto?". She pitched a digital token, but a week after she did that, that token fell 70% in value and the price has not recovered. Kardashian is now being sued. So is boxer Floyd Mayweather and former NBA player Paul Pierce. They all helped inflate the token's price. Basketball player Stephen Curry, American football stars Tom Brady and Rob Gronkowski, Tiger Woods, top NFL draft pick Trevor Lawrence, all of these athletes have affiliations with specific tokens or crypto exchanges. You're seeing ads everywhere. You saw them on the Super Bowl. You see them on golf tournaments, you see them on ordinary TV. All these Hollywood celebrities or sports athletic professionals touting crypto. What do these people know about any of this stuff? Clearly, the companies think that these celebrities will get you to pay attention and that's all good. That's great from a marketing standpoint. The question is just because a celebrity you like is promoting an investment that you know nothing about, does that mean you ought to go buy it just because your favorite celebrity is engaged? Look, we see Tom Selleck pitching reverse mortgages all the time. We see celebrities hawking gold on late night TV. 

Ric Edelman: We need to recognize they're being paid to be a spokesperson. That doesn't mean you ought to naturally go out and buy it. So clearly you need advice on handling the conversation of crypto. Should you use it for collateral to get a mortgage? Should you engage in staking and lending to earn yield? Which wallet is best? Well, you need to figure all this out. And in fact, in the Bitwise 2022 survey, 94% of advisors say they received questions from their clients about crypto in 2021. And nearly half of all advisors personally owned Bitcoin or other digital assets. And despite market volatility, not a single adviser who owns crypto plans to sell. And six out of 10 say they're going to buy more. But only 16% of advisors are currently recommending crypto to clients. Think about that. How would you feel if your financial advisor was personally buying Bitcoin but wasn't recommending it to you? Do you think that's a conflict of interest? Don't you have to wonder if they found this great investment idea that they'd like enough to own themselves, shouldn't they have an obligation to suggest it to you? Talk with your financial advisor and ask them if they own Bitcoin. And if they do. How come they haven't suggested it for you?