Celebrities who endorse cryptos and the Latin American crypto boom

Latin America has a population of 650 Million people, and most of these economies suffer from inflation, government instability, corruption etc., Cryptos is viewed as an alternative and a safe haven by many.

 

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A Latin American friend recently told me that some of the top business families in Venezuela convert their Bolivar (as soon as a big deal is closed) to Bitcoins in an attempt to get it out of the country – Bits have no boundaries. Also lower energy costs have resulted in massive growth of mining of cryptos.

Over the last two years, LATAM bitcoin holders made massive gains against the local fiats of Venezuela, Brazil, Mexico and Argentina. Bitcoin exchange trades in Brazil surged 322% in 2017. Mexican exchanges saw trading volume grow 600% when bitcoin rallied in 2015.

Cryptos are being embraced by consumers who were excluded by the bureaucratic Latin American banks. Now with a booming middle class, mobile and internet penetration, Blockchain has opened up a new financial services ecosystem. Consumers can now create crypto wallets, transfer monies to each other, perform remittance, and even be investors in ICOs. That is a good example of how Blockchain enables financial inclusion, especially in emerging markets.

While there are other practical use cases for Latin America, land registry on Blockchain seems to be taking off. Much like where I come from (India), in LATAM countries real estate is a massive corruption hot spot. Bad record keeping, poor land registries and more worryingly land seizures by politicians can all be curbed by using DLT. With a credible land registry, access to home loans becomes easier.

Consumers in inflation hit countries like Venezuela often turn to bitcoin and cryptos as their safe haven. When governments and banks stop working, they are well backed up by their crypto services.

While researching for Latin American, I understood the endorsements some of these Blockchain networks and products were receiving from some seriously big names. This is a good (not the most recent) compilation of all the top celebrities involved in Blockchain endorsements.

Are these celebrities qualified enough to do this?

From Leonel Messi endorsing a Blockchain phone to Luis Suarez asking Millions of his Instagram followers to get involved in a Blockchain based betting platform and Jamie Foxx endorsing a crypto exchange – it all sounds opportunistic (to put it nicely) to me. A couple of days back I noticed Michael Clarke (the Aussie Cricketer) endorsing a Blockchain platform.

Endorsing a shaving razor or a cool drink is one thing, but this is a totally different play altogether. If Tesla’s Musk can be asked to explain why he used Twitter to tease shareholders about taking the firm private, why are these celebrities not being put to a similar grilling?

They should atleast be able to explain the risks and rewards of using the product they endorse. If they can’t, it should be considered a serious offence. I hope regulators take endorsements into account when they are drafting the framework for cryptos.



Arunkumar Krishnakumar is a VC investor focusing on Impact investments, a writer and a speaker.

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2 comments

  1. On Nov. 1, 2017, the SEC issued an “Investor Alert” on the subject of celebrity endorsements generally (https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-alert-celebrity-endorsements)and a “Public Statement” on ICOs (https://www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos).

    They conclude in the Public Statement, in part: “Investors should note that celebrity endorsements may appear unbiased, but instead may be part of a paid promotion. Investment decisions should not be based solely on an endorsement by a promoter or other individual. Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws.”

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