Scam crypto ads: beware of celebrity endorsements

The exponential rise in popularity of crypto-currencies such as Bitcoin has created a ‘gold rush’ among investors, both experienced and amateur.

The credibility of such currencies has been ratified by the opening of official trading markets and platforms. For example, the Union Bank of the Philippines recently announced it plans to offer trading for crypto-currencies. 

This stellar ascent has been fuelled by celebrity endorsements. Elon Musk famously promoted Dogecoin via personal tweets and confirmed that Tesla would accept Dogecoin as payment for some of its merchandise. Kim Kardashian and Floyd Mayweather also became embroiled in legal action as a result of endorsing the crypto-currency EthereumMax – investors who lost out claimed they were deliberately misled by such promotions.

The examples listed above relate to crypto-currencies which are legitimate (or at least claim to be in the case of EthereumMax). However, there is a much darker side to crypto-currencies, whereby sophisticated criminal syndicates utilise fake celebrity endorsements to promote phantom currencies that do not exist, in turn stealing from unwitting, mostly arm-chair investors.

Are all celebrity endorsements real?

The BBC recently reported that such criminals had used advertisements with fake endorsements from Harry and Meghan, the Duke and Duchess of Sussex. The Times also reported that the England football manager, Gareth Southgate, was also touted as a fake endorser of a scam currency.

The damage being done to everyday investors by such scams cannot be overstated and is becoming ever more widespread. One woman lost £250,000 to a fraudulent bitcoin broker and the government are now introducing urgent legislation to place the promotion of crypto-currencies under the regulatory control of the Financial Conduct Authority (FCA) in order to protect the public. The FCA have also confirmed a worrying four-fold increase in such scams in the last calendar year alone. 

How sophisticated are these scams?

These scams are also becoming more sophisticated, with dedicated sales, business development and marketing teams pushing out glossy, professional looking brochures and websites containing heavyweight ‘endorsements’. My own sister, who is an experienced teacher, was taken in by one of these scams recently, but luckily I was able to warn her in time. It was a fake endorsement by one of TV’s ‘Dragon’s Den’ stars that persuaded her to part with her hard-earned cash.

I'm a victim of crypto fraud, what can I do?

If you have fallen victim to these scams, whether as an investor or rather your image or ‘endorsement’ being used without your consent, then there are legal measures that can protect you. As with the Martin Lewis case, direct pressure can be applied to social media companies that publish these adverts, for example using defamation, copyright, harassment and data protection laws. We can also track down anonymous criminals using trusted cyber and intel professionals. Once identified, we use legal action directly against the culprits, such as court injunctions, ‘unmasking’ orders, ‘cease and desist’ or ‘take down’ notices.

You can report scams to the Metropolitan police’s ‘Action Fraud’ helpline and the FCA have powers to investigate and penalise the criminals involved. Banks are also becoming more willing to re-imburse victims under their fraud policies, so do inform you bank immediately.

Gateley Legal has a dedicated ‘Digital Assets and Currency Group’ with specialist lawyers in finance, reputation management, regulatory, crime and tax law. Please do not hesitate to contact us if you have been targeted by these unscrupulous scammers.