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- 1 The percentage of Celebrity endorsed ICOs being scams has shot up to 43% since April 2023
- 2 Two SEC economists conducted the research on celebrities which included names like Snoop Dogg and Lionel Messi
- 3 Celebrities who endorse brands unrelated to their profession are more likely to be scams.
Research has always been the most logical way to prove things without actually proving them. New research, which was conducted recently, tries to show the link between a celebrity-endorsed crypto project and a scam.
The research was conducted by two former and most trusted SEC economists Joshua T. White and Sean Wilkoff. The research was titled “The Effect of Celebrity Endorsements on Crypto” and it revolved around the topic of celebrities and the effects of advertising different ICOs.
Celebrity and ICO Projects
The research has found that the ICOs that are being endorsed by various celebrities have had an increase in scam rate by 23-26% since September 2019. Additionally, a 40% increase in fraudulent ICOs has been noticed since April 2023. The evidence provided in the research paper is a red flag for investors researchers mentioned.
The research examined 21 celebrities from 2016-2018 which included pretty big names such as Floyd Mayweather, Snoop Dogg, Paris Hilton, and Lionel Messi.
One of the researchers, Joshua T. White told crypto competitors via mail that celebrities usually hype the brand and increase its engagement with their social media reach and also create FOMO. He further said that the nature of the blockchain is quite different and has doubts about whether a celebrity has the knowledge to identify legitimate crypto and management projects.
As per the researcher’s evidence and facts, shocking data has come to light. The data suggests that if the ICO product and the celebrities’ profession do not match, it is more likely to be a scam.
Although the researchers believe that if the celebrity’s profession matches with the ICO, it is less likely to be a scam. For example, a musician promoting a crypto project that includes music in Web3 space.
One of the researchers told crypto competitors that when the celebrity who’s endorsing has a better understanding of the entire project and knows the uses of the token, they seem to be more diligent. It’s as if a soccer player is advertising shoes vs advertising soap. Obviously, the soccer player has much more understanding of shoes than chemicals and the advantages of soap.
The researcher’s endnote was that both the investors and the celebrities should have better knowledge regarding the risks and benefits of the projects. They should understand the due diligence before promoting a digital asset.
White told a media website that if any token creator is opting for a celebrity promotion, it is a way to divert attention and it indicates the poor quality of the token for which the celebrity glamor is being used.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
