| Katusa's Investment Insights | | Celebrity Crypto Stings: Beware the Hype By Marin Katusa | | | Editor’s Note: This week, Katusa Research Senior Analyst Mike C. presents a special public service announcement for Investment Insights readers. | | | Dear Reader,
Do you know DJ Khaled?
How about Logan Paul? Maybe Lindsay Lohan or Kim Kardashian?
If you’re wondering what any of these names have to do with each other, there’s a simple answer:
Each of these celebrities has had their names used in a cryptocurrency scam.
Now it might be tempting to think of these as standalone occurrences, but the list goes on.
50 Cent… Metallica… Lionel Messi… - Celebrity crypto “launches” have totaled well over half a billion dollars in losses to date for those investors who were too eager and willing to blindly follow their favorite idols.
Celebrities looking to cash in on their fame with endorsement deals is a tale as old as time, but the association with crypto is more recent and noteworthy.
And it’s the symptom of a larger trend in the scam “industry”.
From Call Centers to Instagram
Ever since the COVID-19 pandemic outbreak first hit the economy, causing a recession with far-reaching aftershocks, scammers have been on the rise.
As the chart shows, reported losses to scams in the US more than quadrupled year-on-year through 2021. | | Losses continued to grow at a breakneck pace, slowing somewhat around the end of 2022 before picking back up through 2024.
Outside the U.S., criminals exploited the coronavirus outbreak to target victims online. - In the UK, impersonation scams doubled, and investment scams rose by 32% during the pandemic.
- In Canada, money reported lost to investment scams has gone up 20x from 2019 to 2023.
What began as a nascent industry has matured, with scammers refining their methods and targets to adapt to a rapidly evolving world.
Social Media Stickup
And nowhere is this more evident than in the below chart depicting the methods utilized by scammers to contact their victims: | | While all the different contact methods used by scammers to steal money from their victims have seen growth…
None have ballooned so drastically as social media, which stole the top spot from phone scams in early 2021. - 31% of all money lost by US scam victims so far this year has been through social media – up from 13% just prior to the COVID-19 outbreak.
Now of course, there are all sorts of reasons people use social media, but it’s also the top method for celebrities to interact with their fans these days.
George Crypto Parker: He’s Got a Bridge NFT to Sell You
The shift towards social media as the preferred medium for scamming is just half the picture.
The other half, of course, has to do with the growth of crypto scams.
Even though the token and meme coin crazes are well past their heydays, new NFT projects and ICOs are still getting pumped out behind the scenes.
Take a look at the chart below: | | - Just a year after the corona outbreak, investment scams skyrocketed to become the #1 source of money lost to scams in the US.
Nowadays, over 40% of all money lost to scammers is due to some type of investment scam.
Of course, “regular” pump-and-dumps still exist. And yes, plenty of celebrities use their status as social media influencers to manipulate stocks as well, despite the SEC’s best efforts.
But according to a report released earlier this year by the Canadian Anti-Fraud Centre, over half of investment fraud reports and money losses are attributed to fraudulent crypto investment platforms.
Meanwhile, at the same time: | | Usage of crypto as scammers’ preferred method of payment has also shot to the moon in recent years, briefly taking the top spot before settling comfortably in second place, behind bank transfers.
Think You’re a Crypto Wiz? Think Again
Long story short: if you come across an investment opportunity that’s crypto-related, or involves payment through cryptocurrency, approach with a healthy dose of skepticism. - Direct investments into Bitcoin itself, other major altcoins like Ethereum, and stablecoins like USDT are, generally speaking, fair game—but for anything beyond that, you should automatically assume there’s a good chance you’ll lose your entire investment.
And if you found it on social media, it’s probably best to go ahead and write it off entirely.
Doubly so if it came from an influencer or celebrity.
Now, there might be some of you young bucks out there reading this who think that it’s only the boomers getting scammed by all this new fancy crypto tech they don’t quite understand.
Sorry to break it to you, but the data disagrees. | | As it turns out, all that life experience does count for something…
The older you are, the less likely your chances of actually losing money when you encounter a scam.
Unfortunately, older folks generally also have more money available to them, often in the form of retirement savings. So when they do fall for a scam, they lose more on average.
If you’re going to take anything away from this article, let it be these three rules - Stay away from unconventional crypto investments, and anything that requires you to pay in crypto.
- Don’t trust investment ideas on social media.
- Any celebrity or influencer offering investment advice should be ignored.
It’s hard enough getting by these days as it is.
Don’t let some two-bit scammer, or worse—some vein celebrity who wants to add a couple million more dollars to their pile of cash make life harder for you.
Regards,
Marin Katusa | | | |
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