VIP or VP?
Music and movie stars jumping on fads or embracing odd innovations is nothing new, but for some time NFTs have gained traction among the famous and wealthy.
Celebrities are backing the digital tokens, either by minting their own on-brand collections or purchasing them at high prices. Stars such as Justin Bieber, Snoop Dogg and Miley Cyrus have famously endorsed NFTs, and more sports stars are getting in on the action.
NFTs have been around for five years, but the non-fungible token boom really took off last year. It chimes with the launch of the Bored Ape Yacht Club – a collection of 10,000 animated ape NFTs that have come to epitomise the entire industry. BAYC has over the past year become a weather vane for NFTs, like bitcoin is for the wider crypto market. The NFT market including BAYC has faced the same headwinds as traditional assets, towards the end of 2022, the average price is down 40%
However the US Consumer watchdog group Truth in Advertising has lambasted 19 celebrities for allegedly promoting NFTs without disclosing their connection to the projects. The not-for-profit advocacy group said on its website that “it is an area rife with deception”.
Sporting chance or rigged game?
Even as Manchester United soccer star Christiano Ronaldo finalised a multi-year partnership with cryptocurrency exchange Binance to release his NFTs, experts are of the opinion that the deal will set a precedent for other sports icons to join the bandwagon. Ahead of the World Cup in Qatar, Visa are setting a different precedent by having an NFT auction with the proceeds to charity.
Among the star-studded list who are promoting NFTs, are boxer Floyd Mayweather, the NFL quarterback Tom Brady, Eminem and Gwyneth Paltrow – all of whom have been sent letters urging them to disclose any connections they have to NFT companies.
The big shill
Accusations are being made that celebs are essentially acting as a “shill” – a stooge or plant in markets or auctions whose job is solely to drive up prices via fake bids – for these crypto or NFT brands.
A major concerns outlined is that the possible financial risks associated with investing in such speculative digital assets are not being disclosed to fans of the celebs.
TIA previously sent letters to Justin Bieber and Reese Witherspoon’s legal teams for promoting NFTs on their social media accounts without disclosing their connection to the projects. Bieber’s legal team responded last month, denying any wrongdoing but stating the posts would be updated.
So far, there has not been a publicized case of celebrities facing legal penalties for shilling NFTs or crypto. But there are ongoing class action suits, most famously against Elon Musk for his endorsement of Dogecoin, and Mark Cuban for promoting Voyager crypto products.
A handful of other celebrities like Matt Damon caused a significant stir when he appeared in an ad promoting crypto products, which saw the actor mocked and criticised for his involvement.
Our Take
The United States Securities and Exchange Commission (SEC) warned investors about celebrity-backed initial coin offerings in a post on their website. This is good general advice on any endorsements but especially when it comes to digital economies.
Eventually such markets will likely end up more transparent but it’s a good idea to tune out the celebrity angle on NFTs and crypto currencies and instead look at what industry experts and analysts say.