Why are celebrities in trouble over crypto endorsements and what is India’s stand on the matter? – CNBCTV18


Why are so many celebrities suddenly getting in trouble over crypto endorsements, and what is India’s stance on the matter? Read here-

Cryptocurrencies have been generously glorified over the last few years. Top Hollywood celebrities, athletes, and some of the biggest names on television have frequently used social media, music videos, and even interviews to promote virtual digital assets. However, several of these celebrities have suddenly found themselves under the scanner of the law in recent months.

Most notably, Kim Kardashian and Floyd Mayweather were served with class action suits for promoting the cryptocurrency EthereumMax (EMAX). More recently, Justin Bieber, The Weekend, Post Malone, Madonna and several other celebrities were named in a class action lawsuit against the creators of the Bored Ape Yacht Club (BAYC) NFTs

Why are so many celebrities suddenly getting in trouble over crypto endorsements, and what is India’s stance on the matter? Tag along to find out.

Celebrities and crypto endorsements

In January this year, the United States Securities and Exchange Commission (SEC) fined Kim Kardashian for her alleged involvement in a crypto ‘pump and dump’ scheme. Kim was fined $1.26 million because she did not reveal to her enormous fanbase on social media that she was handsomely compensated for promoting the EthereumMax (EMAX) crypto project.

The EMAX project has tanked since then, and the investors who put money into the project have been left holding the bag. This is how a pump and dump scheme works. A project is promoted through well-known celebs, because of which people rush to invest in that project. These investments raise the price of the crypto. But suddenly, those who planned the scheme sell out their share, take the money and disappear.

Coming to the suit with Justin Bieber and co. It alleges that the creators of the BAYC enlisted celebrities to “artificially” boost the value of its NFTs, which has resulted in “staggering losses” for buyers. In addition to Justin Bieber, the suit also names Serena Williams, Stephen Curry, Snoop Dogg, Future, Diplo, Gwyneth Paltrow, Kevin Hart and others as defendants.

Several names have also come up in the class action lawsuit against FTX. These names include Shaquille O’Neal, Gisele Bundchen, Naomi Osaka, Stephen Curry, Larry David, and Tom Brady, who all appeared in FTX commercials. In one of these ads, Steph Curry, a prominent NBA player, denies being a crypto expert but states that since he is with FTX, there is nothing to worry about. We all know how things turned out there.

But why are celebs being pulled up for their crypto endorsements?

In the case of Kim Kardashian, the SEC claimed that she violated the anti-touting provision of the Securities Act; she failed to disclose that she received payment ($250,000) in exchange for her promotion of Ethereum Max, which was an unregistered security.

But that’s how ads work, right? Celebs receive big bucks to promote products and services, so why are they being pulled up for their crypto endorsements? Well, the big difference here is the product. In the US, Ethereum Max and other crypto assets are investment opportunities that fall under the watchful eye of the SEC. As per the SEC’s regulations, Kardashian needed to disclose that she was paid $250,000 by EthereumMax to “tout” the token, which she didn’t.

In the case of the BAYC, investors have argued that the named celebrities have violated the securities law and through misrepresenting and omitting facts, they have solicited their investments.

“The manufactured celebrity endorsements and misleading promotions regarding the launch of an entire BAYC ecosystem (the so-called Otherside metaverse) were able to artificially increase the interest in and price of the BAYC NFTs during the Relevant Period, causing investors to purchase these losing investments at drastically inflated prices,” the lawsuit states. It’s a similar case with the FTX lawsuit.

India’s stand on celebrity endorsements of cryptocurrencies

India has been sceptical about cryptocurrencies since the beginning. The government has closely monitored the space and is taking several steps to regulate it. The country has a vast population, out of which over 50 percent are under the age of 25 years. The youth in India are highly impressionable, and Bollywood has quite an effect on these young minds.

Last year, when the crypto market was soaring, many of the crypto exchanges in India reached out to Bollywood celebrities to endorse their brand. Popular Indian crypto exchanges such as CoinDCX, CoinSwitch Kuber, Bitbns, etc approached Bollywood actors like Ayushmann Khurrana, Ranveer Singh, Disha Patani, Anupam Kher, etc to promote their platforms on national television and social media.

However, the Advertising Standards Council of India (ASCI), a self-regulating organisation founded in 1985, found that investors were comparing returns on gold with that of cryptocurrencies. Therefore, in May 2022, the capital market regulator, Securities and Exchange Board of India (SEBI), proposed a ban on Indian celebrities promoting cryptocurrencies.

“Given that crypto products are unregulated, prominent public figures including celebrities, sportsmen, etc or their voice shall not be used for endorsement/advertisement of crypto products,” said the SEBI reportedly said in a statement.

The market regulator also suggested adding the following disclaimer to crypto ads: “Dealings in crypto products may lead to prosecution for possible violation of Indian laws such as FEMA, BUDS Act, PMLA, etc.”


Celebrities, much like any other citizens, have moral responsibilities toward society. More so because of the love and support they receive from the fans and community. It provides them with that extra stature in society. A lot of people are influenced by them, some people imitate them and imbibe their qualities.

Therefore, if celebrities endorse a crypto service or product, it is important to highlight the financial risks that come with these assets. Otherwise, it can mislead the public and could be punishable by law.

You May Also Like

About the Author: Kate