The buzz around celebrity-endorsed cryptocurrencies, or ‘memecoins,’ has crescendoed into the heated discussion of the week. These internet sensation tokens have set the cryptosphere ablaze, trailed by a hailstorm of criticism due to their controversial launch.
A pump-and-dump rollercoaster tore through the market over the past week, raising enough eyebrows to lead to the U.S. Securities and Exchange Commission (SEC) stepping in with an Investor Alert. Despite the SEC’s cautionary drumbeat, however, the allure of the crypto festival of Q2 continued to usher more musicians into the fray.
The SEC’s warning on Wednesday specifically targeted this burgeoning memecoin landscape. The Commission was quick to spotlight the potential pitfalls of pump-and-dump and pre-sale schemes associated with these digital mementos. A sobering revelation was made that self-serving fraudsters might conjure up a memecoin, peddle it aggressively on social media, then sell to reel in profits. All while unwitting investors might see most of their wealth evaporate as the price rapidly deflates.
The frenetic birth of celebrity tokens has become a widely observed trend in recent times, featuring prominent mainstream figures, influencers, musicians, and athletes expressing an “interest” in the cryptoverse.
Quite often, the glitterati dip their toes into crypto waters prior to announcing their own soon-to-be-unveiled tokens. The current wave of memecoin fascination, however, has been steeped in controversy as many of these celebrities have supposedly collaborated with a man accused of serial scamming ventures.
Sahil Arora, the alleged con artist in question, found himself between the crosshairs when celebrities and community members accused him of manipulating multiple pump-and-dump scams. Investors and partners have reportedly been taken for a ride on each memecoin launch with Arora at the helm.
Australian rapper Iggy Azalea’s token offering called “MOTHER” came to light recently. Azalea claimed the driving force behind the creation of the token was to prevent Arora from exploiting her image for his dishonest schemes. Similarly, Rich the Kid and Caitlyn Jenner voiced their accusations, claiming to have been misled by Arora.
Interestingly, a slew of musicians have joined the memecoin jamboree even amidst allegations of duping their fans.
Widening the spotlight, renowned crypto detective ZachXBT recently accused rapper Lil Pump of dipping his hand into a pump-and-dump scam. The rapper reportedly posted and promptly removed a post promoting his memecoin following a dump. A quick rebuttal from Lil Pump claimed no such token was created by him and threw allegations at Arora for defrauding him and his fan base.
Meanwhile, an anecdote involving American-Nigerian singer and producer Davido triggered substantial chatter. Reports surfaced that, while promoting his ‘Davido’ token in an online discussion with a crypto trader, the performer sold over half of his token holdings.
In the wake of these events, many within the community asserted that promoting individuals with limited interest in the space could be predatory and dangerous. The existence of platforms that lend credibility to these celebrities was questioned, accusing them of enabling damaging actions on unsuspecting investors.
With the future of memecoins as unpredictable as their birth, the cryptoverse is set to witness many more riveting chapters in the days to come.
