As Crypto Mania Turns Into Crisis, Celebrities Erase Their Crypto Ties

As Crypto Mania Turns Into Crisis, Celebrities Erase Their Crypto Ties ...

Lillie Langtree is said to have started the conversation.

When she became the poster girl for Pears Soap in 1882, a British actress and socialite, known as "The Jersey Lily," is credited with being the first celebrity to endorse a product.

In the Beginning...

Some think the idea dates back to the 1760s, when Josiah Wedgewood, a British businessman, created a tea set for Queen Charlotte, which was later dubbed Queensware."

"Celebrity endorsements, of course, go back forever," said Robert Thompson, a Syracuse University professor of television and popular culture. "We probably had a cro-magnon endorsing certain saber tooth tigers over others."

Athletes, actors, and celebrities have taken their turns promoting a particular sport or service, and, according to estimates, 14% to 19% of advertising aired in the United States featured celebrities who endorsed goods and brands.

According to a Harvard Business School study, celebrity endorsement increases a company's sales by an average of 4% compared to its competition, and also increases a company's stock value by 0.25 percent.

Ty Cobb, Babe Ruth, and Cy Young were used to endorse tobacco companies in the early 1900s. Mark Twain endorsed fountain pen, his own co-brand of cigars, clothing, and Old Crow Whiskey, among other items.

Jimmy Fallon, Jamie Fox, Paris Hilton, Larry David, and Matt Damon have all praised digital currency, up until the crypto price crash.

'Poster Child' is a term used by artists.

"Celebrity endorsements are particularly attractive for all of these companies because cryptocurrency is something a lot of people do not understand," Thomson said, adding, "even when it's explained to them, they don't fully understand it." It's a nebulous concept in the first place, so you've got to devise a strategy."

According to him, these endorsements go with "the age old assumption that if somebody that is well-known and successful believes this is a good idea, then it must be a good idea."

After crypto prices plummeted, Damon, described by Thompson as "the poster child for celebrity endorsements," was treated to a fare-the-eve on Twitter for his Crypto.com (CRCW) "Fortune Favors the Brave."

Thompson also referred to Larry David's FTX commercial, which depicted him downplaying everything from the wheel to democracy, to the light bulb, and, finally, FTX.

"It took the notion of fear of missing out and put it in your whole economic future, and then it became FOMO as a major historical theme," he said. "It's a brilliantly clever commercial."

"Celebrity endorsement of cryptocurrencies probably prompted a lot of individuals to make their first cryptocurrency investment," said Frank Corva, Finder's senior analyst for digital assets. "The issue with that, though, is that these newcomers who bought because celebrities endorsed certain digital assets often did not understand the principles behind assets like Bitcoin or how to self-custody digital assets."

'A Gray Area'

Corva said that many newcomers purchase digital assets "without knowing how different these assets are from traditional assets or how much more volatile the prices of these assets are than those of traditional ones."

"Crypto crashes occur in part because newcomers become disgruntled and sell at a loss when they see the prices of the coins or tokens they purchased decreasing dramatically," said the musician. "Most celebrities arent encouraging individuals to do homework on the nature of these assets before buying a small quantity."

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Rather, Corva said, "certain celebrities promote specific coins or crypto platforms during a bull market - when the hype machine is in full swing - and dont warn buyers about the downside or the many risks associated with owning these assets."

Jenna Drenten, a graduate student in the Quinlan School of Business at Loyola University Chicago, believes "celebrities need everyday consumers to invest" in digital investments such as NFTs and cryptocurrency, because it might result in own financial rewards.

"There's a divide between celebrity as endorser and celebrity as entrepreneur," she said. "In the past, celebrities' images were just used as window dressing to promote goods; now, celebrities often have a vested financial interest in the products they promote, but are rarely prepared to take ownership of how their persuasion might be exploited."

'Consumers Scrambling'

"Celebrities have teams of experts who work for and with them to manage their financial investments," Drenten added.

"Most everyday consumers do not," she added. "Any fallout from a celebrity-endorsed product, digital or otherwise, leaves consumers scrambling, whereas celebrities themselves are better equipped to weather a storm, such as a market downturn."

Edward Moya, an Oanda senior market analyst for the Americas, said that "too many celebrities and athletes have a significant impact on young people, and they were some of the most aggressive crypto adopters."

Kim Kardashian, boxer Floyd Mayweather, and former NBA player Paul Pierce have been named in a lawsuit for allegedly frauding their followers into investing EthereumMax, which Moya described as "one of the greatest problems."

"Most celebrities will get a pass for supporting cryptocurrency in general, but many social media influencers who supported tokens that ended up being scams will likely face legal problems," said the author.

Back in January, Jimmy Fallon and Paris Hilton discussed their Bored Ape Yacht Club NFTs, back when the market was hot. However, the climate changed, and Fallon has since removed his Bored Ape image from his Twitter profile.

"The excitement surrounding the Bored Ape Yacht Club beginning early this year has resulted in a proliferation of projects and NFT strategies that are opaque, questionable in their motivations, often solely profit-driven, and sometimes clearly fraudulent," according to Martin Hiesboeck, Uphold's head of blockchain and crypto research.

'True Believers'

Hiesboeck said that "the very concept of unregulated, unsupervised non-fungibility, ie digital assets, whose price is unique to one individual item, and the marketing around us allows for abuse on many levels, which is why the space is currently plagued by repeated hacking attempts and bad actors."

WeWay, the Web3 ecosystem's co-founder and vice president of IR, said that "there is a massive onslaught on the global financial sector due to increasing inflation and unbalanced monetary policies, and this crypto slump is not an exclusive event."

"For what it's worth, the digital currency ecosystem needs credible personalities to help publicize the inherent potential of some of these innovative protocols," he said. "The only celebrities who can be held accountable are those who scam projects shilling."

"The digital currency ecosystem requires celebrities to introduce disruptive goods and services to the mainstream," Synegin concluded.

And to be fair, not all celebrities have slowed down.

Snoop Dogg and Eminem, both owners of Bored Ape NFTs, were recently invited to attend Ape Fest, an annual event hosted by NFT.NYC.

Jay Z teamed up with Twitter (TWTR) - Get Twitter Inc. Reportfounder Jack Dorsey, to begin educating those who live in New York City public housing about bitcoin.

"It appears that some celebrities are true believers, while others are simply out there to make money while the getting is good," Corva said.

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