Just when we thought the hype around Dogecoin died down, there’s a new memecoin in town.
In June 2024, PlayDoge raised $5 million in a viral ICO, reminiscent of Dogecoin’s wild ride in 2021, thanks to Elon Musk’s viral tweets. Dogecoin started as a goofy meme in 2013, a parody of the cryptocurrency market then. However, things changed when Elon Musk openly rallied for the memecoin with tweets like “Doge is the people’s crypto” and “SpaceX is going to put a literal Dogecoin on the literal moon,” causing a significant price surge and leading to Robinhood experiencing record crashes.
Musk’s tweets created a frenzy, attracting mainstream attention and turning Dogecoin into a household name. What’s more, subreddits like r/WallStreetBets and r/CryptoCurrency buzzed with discussions, further fueling the hype and drawing more investors into the memecoin mania.
Celebrity ICOs and endorsements of crypto tokens aren’t new. In 2017, big names like DJ Khaled and Floyd Mayweather Jr. were among the first to catch the wind, openly endorsing various ICOs on their Twitter and Instagram handles. Fast-forward to today, and we’ve got the likes of Caitlyn Jenner and Iggy Azalea launching their own memecoins.
But behind the glitz and glam lies a complex web of scandals, SEC crackdowns, and public skepticism.
Lawsuits & More
The recent FTX lawsuit Edwin Garrison et al. v. Sam Bankman-Fried et al. in 2023 is a sobering reminder of the potential pitfalls of celebrity-endorsed crypto scams. The $11 billion lawsuit led by lead plaintiff Edwin Garrison alleges that high-profile celebrities like David, the creator of the TV show “Seinfeld,” and Golden State Warriors, a National Basketball Association team, used their fame to encourage users and investors to actively promote and participate in FTX Trading and FTX US, offering unregistered securities in the form of yield-bearing accounts (YBAs) to US residents.
In 2022, Kim Kardashian was charged by the SEC for promoting a crypto asset, EthereumMax (EMAX), on her Instagram account without disclosing that she was paid $250,000 for the promotion. Kardashian settled the case for $1.26 million, which included a $260,000 disgorgement (representing her promotional payment plus interest) and a $1 million penalty. She also agreed not to promote any crypto asset securities for three years.
Floyd Mayweather Jr. was also implicated in the same case for promoting EMAX. This was déjà vu for Mayweather; in 2018, he and DJ Khaled were charged by the SEC for failing to disclose payments for promoting ICO investments. To settle SEC charges for failing to disclose a $244,000 payment he received for promoting EMAX on social media, he paid $1.4 million.
Akon, the “Smack That” singer, in 2018, had envisioned a wild project called Akon City; a futuristic, Wakanda-inspired city in Senegal running on his cryptocurrency, Akoin. Akoin took off in 2020 after a successful pre-sale fundraising campaign called the Token of Appreciation (TOA). However, the much-hyped Wakanada-like Akon City has barely made any progress and, in fact, left Akon facing a lawsuit over a $4 million debt related to the project.
While the FTX case hinges on the critical question of whether cryptocurrencies should be considered securities, Kardashian and Mayweather’s cases show that settlements and penalties can sometimes allow celebrities to come clean, learn their lessons, and move on.
Drawing the Bigger Picture from Current Trends
“Crypto is the wild west of finance,” – This statement captures the sentiment of several industry experts in the Web3 and crypto world, who are increasingly wary of celebrity-endorsed ICOs ( as they should be). Many of the people we encounter on social media who aggressively promote such initiatives come across as unpleasant and off-putting, reminiscent of the worst kinds of salespeople and cultists.
“The worst reason to make an investment is a celebrity endorsement.”
Andreas Antonopoulos, Bitcoin advocate, Tech entrepreneur, and Author
Indeed, the excitement around the crypto subculture of memecoins has its charm, but it also evokes a poignant sense of worry. Very clearly, it appears financially exploitative and dangerous, possibly even a waste of time. Rather than heralding a brave new world of financial freedom, it seems like a new form of an old problem.
The crypto space is becoming a new playground for popular stars with their celebrity ICOs. Memecoins like PlayDoge are part of a larger trend that’s only growing in 2024. Of course, it’s a trend that’s caught on like wildfire, showing the power of social media in shaping financial markets. However, it also underscores the importance of investor education, discretion, and caution.
What’s my takeaway? The glitz and glam may draw attention, but they do not necessarily equate to sound financial advice. Remember, behind every glittering coin, there’s a lot more than meets the eye!
