Home > News > The EU is correct about crypto – Kim Kardashian proved it

The EU is correct about crypto – Kim Kardashian proved it

Yesterday, the EU released a statement that made waves online. Europe’s banking, insurance and securities watchdogs all came together to warn consumers they “face the very real possibility of losing all their invested money if they buy these assets”. And they are correct.

I’m a cryptocurrency investor. I think it will go great things for society. And I don’t plan on selling my crypto anytime soon. However, the EU are simply doing their job – they are warning the public about the very real risks here. And they’re correct to do so.

Losing it all

Figures for how many cryptocurrencies there are vary from 11,000 to 18,000. There is no question that the bulk of these are worthless. Plenty are complete scams. A perfect illustration of this is how the term “rug pull” has entered the lexicon of every crypto investor.

A rug pull is a type of exit scam that crypto developers often carry out. The founders essentially pump up a (normally new) token before withdrawing all the tokens from the liquidity pool and making off with investors’ cash. The rug is “pulled out” from under the investors. They can also suspend sell orders or dump all their holdings – the details may vary, but the result is the same: your cash is gone. 

(If you want the equivalent of a rug pull in real life, look no further than the best American football QB ever – Tom  Brady, who retired two months ago. The football with which he threw the last touchdown of his 22 year career was auctioned for over $518,000. The next day, Brady unretired – the value of the ball plummeted. Yikes).

Given the anonymous nature of lots of founders, there is nothing the duped consumers can do to retrieve their funds. So, just like the EU outlines, investors truly do risk losing it all. There’s no reason a statement like this should ruffle feathers; it’s regulatory bodies doing what regulatory bodies should be doing: looking out for consumers.

Too Good to be True 

After all, scammers made off with $14 billion in 2021. Cryptocurrency still has very active corners whereby the sinister, dark and anonymous lurk with nefarious intentions. Follow the wrong advice, get caught up in FOMO or start thinking you’re too smart for your own good, and you may venture into those traps.

The statement continued that consumers “should be particularly wary of promised fast or high returns, especially those that look too good to be true”. Not the most unique advice in the world, but still very important – and difficult to follow. I myself got rug pulled a couple times during the pandemonium of the 2021 bull run. It was nice reality check on my ego (it leaves you feeling very stupid, like when you’re half wake in the morning and pour orange juice onto your Weetabix instead of your glass, to use one completely hypothetical siutation). More importantly, it was also a very painful hit to my bank account. So ye, if it seems too good to be true, it probably is.

Influencers

The final part of the statement that I want to talk about – and praise – is the point warning consumers to “be alert to the risks of misleading advertisements, including via social media and influencers”. Yes! Yes, yes, yes a thousand times. There is nothing that grinds my gears more than celebrities advocating a obvious scam at the expense of their naïve followers.

This particularly sad story is one example – Kim Kardashian and Floyd Mayweather, two celebrities known for their strong moral compasses and fierce integrity – getting sued over their money-grabbing promotion of EthereumMax. Take a read of Kim K’s Instagram story below, posted to her 237 million followers:

The post, according to data intelligence firm Morning Consult, reached 1 in 5 adults in the US and 3 in 10 crypto owners. The post makes me cringe beyond belief. And guess what happened next (hint: you don’t need to be genius to get it right).

 

The above graph is the price of EthereumMax since Kardashian’s tweet. Down 98%. But hey, she needs the money, I guess – both Kim and her sister Kylie were caught lying about their billionaire status when in fact they were only worth a paltry $900 million.

In wrapping up, I’m choosing to applaud, rather than scoff, at the EU’s statement. Of course you can lose it all in crypto – just like you can lost it all investing in any asset class. But with crypto being so nascent, and tendency for anonymity, it’s more commonplace at this moment in time than most of the other major asset classes. Besides, the speculation we have seen over the last couple of years from retail has exacerbated the gains and losses of so many.

So the EU is right. Crypto is great – but be careful.

Accepts customers from the USA
Deposit $100 and get a $10 bonus!* Build a diversified portfolio with crypto, stocks, and ETFs — all in one place.
Trade on the world's leading social trading and investing platform
Open my Account
We use cookies to personalise content & ads, provide social media features and offer you a better experience. By continuing to browse the site or clicking "OK, Thanks" you are consenting to the use of cookies on this website.