Understanding Cryptocurrency’s Celebrity Craze

Understanding Cryptocurrency’s Celebrity Craze
Illustration: VIP+; Adobe Stock

Blockchain technology and cryptocurrency, like many goods and services, have sought celebrity endorsements to bring their products to the attention of consumers and the market.

That’s where things get sticky. In crypto’s first boom in 2017-18, the overall knowledge base was a lot lower than it is today, and celebrities including Floyd Mayweather, Steven Seagal and DJ Khaled endorsed Initial Coin Offerings (ICOs) for many cryptocurrencies that ended up being fraudulent, setting the medium back regarding consumer trust.

The biggest controversies, resulting in fines and bans from the SEC, were related to celebrities failing to disclose payments for their endorsements.

ICOs may be less frequent today than in the past, but the likes of Kim Kardashian and Mayweather — yes, again — are still mired in cryptocontroversy owing to celebrity endorsements typically being nothing other than a quick cash grab.

Yet not all endorsements end in scandal. Jamie Foxx endorsed the Cobinhood ICO in 2017, for example, and avoided censure by the SEC. The Cobinhood CEO apologized in 2021 for unethical ICO behavior, but this was unrelated to Foxx.

Cryptocurrency exchange FTX has also managed to stay away from controversy, as have its celebrity ambassadors Gisele Bündchen, Tom Brady and Steph Curry. FTX employs a different model of endorsement we may see more of, which involves the public figures having an equity stake in the company.

In order to attract high-caliber talent, these endorsement deals must be aboveboard, with the celebs themselves having a stake in the long-term future of what they are endorsing. This is a far cry from the previous dip-and-dash style of many celebs who used to escape the worst of what they were promoting, SEC censure aside, although as rapper The Game, Kardashian and Mayweather are finding out, there may be courtroom repercussions.

Another type of crypto endorsement is philanthropy, in two different modes: committing the celebrity’s image and brand to a specific cause; and one-off NFT sales, with a portion of the proceeds going to charity.

Of the latter, the most famous example is Jack Dorsey’s auctioning of Twitter’s first-ever tweet in 2021. The proceeds went to the charity GiveDirectly, with the NFT selling for $2.9 million. Perhaps forgetting that the initial auction was charitable — which in the real world sees bidders pay higher prices in the name of a good cause — the subsequent owner assumed the value had skyrocketed and put it up for auction anticipating a fee of $48 million, with half donated to GiveDirectly (and even Jack Dorsey questioning why this proportion was not higher).

The market judged this to be a cash grab, profiting off of charity, with little interest and the highest bid $280 before the auction was canceled.

The other type of crypto philanthropy, where celebrities such as  Bündchen and Linkin Park’s Mike Shinoda commit to campaigns and causes, are much more likely to be met with public goodwill as they are extensions of their public image.

In Bündchen’s case, she accepted a role as the head of environmental and social Initiatives at FTX, which recently announced plans to donate $1 billion to charity in 2022. This is a much-needed positive boost for the public perception of crypto, showing that the sums generated by it are being put to good use and offsetting the negative publicity from the loop of ICO frauds and negative NFT endorsements.

While it should be anticipated that some celebrities will continue to accept the easy cash from potentially shady NFT and crypto products for some time to come, attention should be paid to how they are being paid. If it is in equity, the product is likely legit. Equally, the involvement of celebrities and brands in crypto philanthropy will continue, as the sums generated will continue to grow and leaders look to invest back.