The celebrity world isn’t just about glitz and glamor, it’s now also about NFTs. Why this can become a problem.
Bored Ape Yacht Club” is the name of the trend with the cartoon monkeys, for which many US celebrities sang praises. From Paris Hilton, Kevin Hart and Post Malone to Justin Bieber and Madonna, they’re all jumping on the NFT bandwagon. Now they are being accused of inflating the price of the digital cartoon monkeys, the purchase of which serves as a ticket to exclusive parties. A similar case already existed with the now insolvent crypto exchange FTX and other prominent names. But how confidential are the stars’ NFT recommendations? What are the risks of such statements and what should interested investors pay attention to?
With a cartoon monkey to exclusive parties
There were many stars from a wide range of fields who showed up as advocates of the NFT collection Bored Ape Yacht Club (BAYC) by the Yuga Labs brand: be it pop legend Madonna, rap star Eminem, or star soccer player Neymar Jr. – she and at least 30 other celebrities publicly revealed their investments in the NFT collection. Many fans were quickly convinced, after all, the purchase of the digital cartoon monkeys serves as a ticket to first-class events. Neymar Jr. alone invested 189.69 ETH – at the second point over 570,000 dollars – for his first digital comic monkey #5269. The second NFT, Ape #6633, was also worth an investment of 159.99 ETH, or around $374,000. Other stars also announced their NFT monkeys: Madonna showed her 17.8 million followers in an Instagram post her Ape #4988, an animated cartoon monkey with pink fur and a black outfit.
But not only the acquisition of the cool monkeys is expensive – the price for the surreptitious advertising can soon cost the stars a lot. The US law firm Scott + Scott of California filed a class action lawsuit against the developers of the NFT collection and their celebrity advocates in December 2022. They are said to have artificially inflated the prices for the NFTs with their surreptitious advertising. None of their statements on social media have been flagged as advertising, as required by law. Thus, it is assumed that they were actually paid for their “purchases” by Yuga Labs. According to the developers, however, this accusation is not true. According to their statements, none of the said stars were paid to join the club. Now the court has to decide.
Kim Kardashian, Gisele Bundchen and Tom Brady were also on trial
The Bored Ape Yacht Club case is reminiscent of previous cases involving the stars involved in NFT and crypto promotion. Kim Kardashian had to pay more than $1.2 million when she went to court for her public postings about EthereumMax. A class action lawsuit was also filed against them, alleging that they pushed the price of the crypto token and made a profit from it themselves. Although the class action lawsuit was dismissed, Kim Kardashian later had to make a settlement payment.
Celebrities and the crypto world don’t always seem to get along well.
This is how it happened in the case of FTX. Top model Gisele Bundchen and NFT superstar Tom Brady worked on the crypto villain’s advertising campaign until it recently went bankrupt.
They too had to answer for their advertising statements. Both were responsible for appearing in a commercial in 2021 with the slogan “FTX. You in?”. They are said to have convinced a large number of people to trade on the crypto exchange. Almost two years after the commercial, ex-CEO Bankman-Fried went on trial for “fraud on an epic scale” and the two prominent names were also indicted. Many investors are now demanding their money back. Bundchen, Brady and other celebrities are now awaiting judgment for what the attorney said was “distorting and fraught with important omissions.” With their ads, they not only tried to inspire trust in their fans, but also to convince them. According to the indictment, this methodology of attracting people to investors closely resembles a fraudulent Ponzi scheme.
This is the truth behind celeb crypto endorsements
Many inspired investors do not initially question the fact that stars such as Madonna or Justin Bieber also want to participate in the NFT trend. After all, everyone can invest in crypto, regardless of their profession or expertise. Nevertheless, caution is advised: behind most crypto recommendations there is actually a marketing strategy that is intended to convince many fans to invest in the advertised brand and let celebrities benefit from it. While many celebrities may be interested in NFTs like many other people, in most cases it’s all about jumping on the crypto bandwagon and getting their name out there. Because the crypto world also deals with influencer marketing, among other things, so working with famous names is not entirely out of the question. The management of the stars follow current trends and regularly look for cooperation partners. Advertising strategies are developed together with the crypto developers or platforms and advertising is disguised as a supposed “hobby” of the stars in order to make it easier to win over potential customers.
Therefore, one should be careful with crypto recommendations from celebrities. Behind their statements is not just personal interest. The fact that stars from the music industry or the football scene suddenly developed a passion for tech, invested thousands of dollars and announced it should make people think. Often not even the stars decide which crypto companies they work with. Rather, it is the managements that organize these advertisements and enter into a deal with the developers or exchanges. The probability that celebrities like Eminem, Justin Bieber or Paris Hilton post free of charge about NFT collections out of empathy and enthusiasm is extremely small. Of course, this does not mean that prominent people cannot be interested in cryptocurrencies or NFTs, or invest and trade themselves. Usually, however, there are contracts behind these recommendations from which both sides benefit. Thus, investors are advised to follow these celebrity crypto statements with caution and not to believe every promise, as the FTX bankruptcy case proved.
Music, fashion, soccer – and suddenly NFTs too. The crypto world is not limited to common investors, celebrities are also participating in the crypto trends. But not all that glitters is gold. Kim Kardashian has already suffered the consequences of surreptitious advertising with the bitter experience of having to pay a settlement of more than one million US dollars. Other, numerous prominent names are also waiting for their verdict. Fans should beware and don’t be misled by their favorite celebrity’s crypto endorsements. The crypto exchange FTX, which was promoted by Stars at the time, is now bankrupt, and many of the investors’ funds have not yet been paid out. Behind the hype for celebrity NFTs is signed deals, and for many inspired investors, that could quickly mean losing money.
Author Jacqueline Lehmann is CEO of Ledger21 AG, a subsidiary of Green Capital & Beteiligungen AG, which specializes in investing in the emerging cryptocurrency market.
