Kim Kardashian has been sued by the US Securities and Exchange Commission after posting advertisements on her Instagram promoting the purchase of cryptocurrency without providing that she was being paid. EthereumMax, the cryptocurrency company that paid Kardashian, is facing claims about running misleading schemes with the help of influencers after it crashed following her post, according to Rolling Stone.
Sam Ruskin, president of the cryptocurrency and block chain investment club, said now more than ever, it is important for Ohio State students interested in cryptocurrency to understand what they’re investing in.
“The way that I see crypto is that it’s a way of building this whole new internet,” Ruskin, a fourth-year in finance, said. “It allows for more productivity, it kind of offers a charitable approach to delivering projects.”
Cryptocurrency, according to Coinbase, is decentralized digital money designed to be used over the internet. Created in 2009, crypto has now gained popularity on social media apps but still lacks first-time user clarity, which can lead to bad investments.
“The problem is, it hasn’t really been demystified yet, which I think needs to be worked on,” Ruskin said.
Julia Whiting, president of the media literacy club at Ohio State, said it can be easy to fall prey to scams on social media, especially with a digital system, such as cryptocurrency, that people may not understand.
“The SEC requires you to disclose if you’re being paid to post for these kinds of companies, And sometimes celebrities don’t do this, or they only do it on one post and don’t include that they’re being paid on associated posts,” Whiting, a third-year in business administration, said.
Austin Lawrence, a second-year in philosophy and vice president of the media literacy club, said this ambiguous tactic was used by Kardashian, as she said in the post a friend recommended her to this cryptocurrency company and used “#ad” only one time .
Lawrence said as crypto becomes more prevalent on social media, it becomes vital for students to look at trustworthy sources and do their own research when participating in online contests or investments.
“Even that little thing can show the motives of what that influencer is trying to promote,” Lawrence said. “Especially with, like, cryptocurrency, how new it is, a lot of people may not understand the basics and then fall easy prey to these scams.”
Lawrence said it may not be that influencers have malicious intent when promoting these scams because they may not understand what they’re promoting.
“I think it’s more just the motive of that check,” Lawrence said. “The influencer may not even understand themselves what they’re doing, they may just say, ‘Oh, it’s another ad, I can get a check for this.’”
Going forward, Whiting said it can be beneficial for students questioning the legitimacy of a cryptocurrency promotion to avoid giving out personal and financial information online, unless you’re expecting to hear from a certain organization or business.
“Avoid random pop-ups about antivirus software or ‘make money quickly’ ads,” Whiting said. “Take time to check with family, friends and your bank to make sure that everything is legitimate.”
Ruskin said another way to avoid getting scammed in terms of crypto is to do your own research.
“For now, if you are interested in investing with crypto, doing your own research is extremely important,” Ruskin said. “Getting to know your community and saying, ‘Alright, are these people really interested in delivering value on this project? Or is this just another scam project?’”