Cryptocurrency giants Bitcoin and Ethereum have plummeted in value in what investors are calling a crypto winter.
Crypto lending firm Celsius Network has filed for bankruptcy, cryptocurrencies TerraUSD and Luna have imploded costing investors an estimated $40bn, and many lesser-known crypto tokens have sunk without trace.
Among those getting the blame from shattered savers are the film and sports stars who went online to hype what turned out to be disastrous virtual assets.
A trio of celebrities were lined up to push cryptocurrency HyperVerse, launched at the start of the year and touting the prospect of “huge profits”.
“I’m here to support HyperVerse," said Lance Bass, former singer with boyband NSYNC, in an online video. "I strongly believe metaverse is the future and HyperVerse is one of the biggest ever,”
Referring to the HyperVerse chief executive Steven Reece Lewis, he went on: “Steven and the HyperVerse team will pioneer the next hottest trend, the metaverse awaits and I cannot wait.”
Another promoter was movie hardman Chuck Norris, who starred in 1980s hits The Delta Force and Lone Wolf McQuade. ““Chuck Norris here and I want to give a shout out to HyperVerse," he gushed online.
"Under the leadership of CEO Steven, HyperVerse will be the leader of metaverse space."
“I’m here to support Steven and HyperVerse," said Steve Wozniak, co-founder of Apple, in his video. "Can't wait for the HyperVerse."
I’ve asked all three if they’ve actually met Steven Lewis but have heard nothing back.
Which didn’t surprise me because I suspect that he’s a figment of someone’s imagination, created to give a false sense of security to this sham.
I can find no record of such a person other than a Twitter account started last year, and HyperVerse has refused to answer my questions about him or even give me an email address so that I can put questions to him directly.
HyperVerse was aggressively promoted to small savers, especially in Britain.
At its peak, the HyperVerse token was trading at $7.67, according to price tracking site coinmarketcap.com – and now it’s effectively worthless, priced at $0.00003047.
No doubt the star backers were just as innocently misled as the investors who lost everything, something which I'm sure applies to all the celebs named here.
Hollywood A-lister Matt Damon starred in an online advert for exchange platform crypto.com, which boasts of having 50 million users trading more than 250 different cryptocurrencies.
In the advert he compares people who put their savings into crypto with great historical explorers and astronauts, declaring: “Fortune favours the brave”.
Crypto.com has not revealed how much it paid the actor but what can be calculated is how far the crypto markets have plunged since the advert went online on October 28 last year. If you put $1,000 into Bitcoin when the advert was first screened, it would now be worth $382.
Responses to the advert included an episode of adult cartoon show South Park, where one character says: “My dad said he listened to Matt Damon and lost all his money,” and another character replies: “Yes, everyone did! But, they were brave in doing so!”
One reply on Crypto.com’s Facebook page read: “Just remember one thing, when you lose it all, Matt Damon ain’t around to save you.”
Oscar winner Gwyneth Paltrow pushed Bitcoin in a paid promotion for the Cash App crypto payment platform last December.
Her theme was that women were somehow excluded from crypto markets, although she didn’t explain how.
“In order to democratise who can participate, @Cash App is now making it easy to gift Bitcoin,” she posted on her Instagram account just before Christmas.
“And the best part – I get to give out $500k worth of Bitcoin to you to spread the holiday cheer.”
Women who were inspired by her to put their savings into Bitcoin are probably regretting it now. Since her post, its value has fallen from more than $48,000 to less than $19,000, equivalent to around £16,600.
Tennis star Serena Williams also partnered Cash App and pushed the same line as Gwyneth Paltrow, saying: “It’s important to expand Bitcoin to women and people of colour,” describing the cryptocurrency as “a super strong currency”.
That was in April. Since then its value has more than halved. It may recover, but that’s no consolation for anyone who needed to cash in their Bitcoin for real money, and suffered huge losses in the process.
In one of the most notorious cases, Kim Kardashian introduced her online following to a disaster called EthereumMax.
The first red flag suggesting something might be wrong was the name. It’s almost as if it was purposely chosen to make people think it was an offshoot of crypto-giant Ethereum.
It wasn’t.
Among those who hyped it was boxer Floyd Mayweather, who took to wearing EthereumMax T-shirts, and Kim Kardashian who promoted it to her 250 million Instagram followers.
That prompted the chairman of the UK Financial Conduct Authority, Charles Randell, to speculate last September that it was the financial promotion with the biggest audience reach in history.
“Of course, I can’t say whether this particular token is a scam,” he said. “But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation."
He went on: “We simply don’t know when or how this story will end, but – as with any new speculation – it may not end well.”
It hasn’t. Both Mayweather and Kardashian are named as defendants in a lawsuit in California where a group of investors want compensation for the losses they have suffered since buying Emax.
Kardashian’s lawyers have responded by claiming that her Instagram posts were not investment advice, and the complainants have not proved that they bought into Emax after seeing her posts.
According to its website, there are more than 111,000 holders of the Emax token, which has lost 99% of its value since peaking in June last year.
Alongside cryptocurrencies there’s another form of investment in the virtual world, unique digital images known as non-fungible tokens or NFTs.
Former England and Chelsea footballer John Terry dived into this market with his Ape Kids Football Club cartoon NFTs.
An early problem was a run-in with the Premier League, which complained that the use of its trophy was a breach of copyright. Then came a calamitous lack of interest in the project.
Ape Kids Football Club was launched at the start of this year with the tokens trading at around $656, but the price quickly collapsed and has never recovered, with recent sale prices of around $15.
Data on the OpenSea NFT marketplace shows that just 2,300 people bought them.
Another football who plugged NFTs was Paul Pogba, who launched a series of fantasy images last November that featured cartoon eggs which hatched into dragons.
Frenchman Pogba, then at Manchester United, said in a video message: “I am happy to announce to you my partnering with a phenomenal project called Cryptodragons.
“This is my first time getting NFTs so this is huge and you see I’m going to get some dragons’ eggs so as you know what’s going to happen, I’m going to be the father of the dragons.”
The dragons would “Breed, battle, earn” in the metaverse – though early investors are not seeing any earnings.
According to data on OpenSea, the highest selling cryptodragon went for 18 Ethereum on December 26 last year. At the time that was the equivalent of around $72,000, or £63,000.
Now there’s hardly any sales activity and the average sale price is 0.04 Ethereum, or around $55.
I approached every celebrity named in this piece for comment and the only reply I received was from a spokesman for Pogba, who’s now at Juventus, saying: “I work for Pogba management. No comment about this subject.”
The Parent Trap actress Lindsay Lohan hasn’t been shy to promote virtual ventures, including NFTs of real and imaginary women called Bull Market Girlfriends.
“Excited to partner with @bullgirlfriends to launch my exclusive #NFT,” she tweeted on September 2 last year.
That day the price of Bull Market Girlfriends listed on OpenSea rose to more than 16 Ethereum, around $60,000 or £53,000.
Within a month the price foundered and despite sporadic recoveries the average sale figure is around half an Ethereum – or less than $700.
Figures released by the Financial Ombudsman Service show that more than half of the investment complaints that it received in the last quarter involved cryptocurrencies.
In some cases savers reported losing tens or even hundreds of thousands of pounds.
Earlier in the summer Santander warned of a 61% rise in reports of cryptocurrency scams, and highlighted a "worrying rise" in the number of schemes promoted by celebrities.
“We’re seeing a worrying rise in ‘celebrity-endorsed’ cryptocurrency scams, where familiar faces are being misused on social media in order to con people out of often life-changing sums of money," said the bank's Head of Fraud Risk Management, Chris Ainsley.
"Rather than revelling in the promised high returns, people are losing significant sums after being duped by these highly sophisticated criminals. Always do your homework and thoroughly research any investment opportunity before moving any money - irrespective of who is endorsing it."
investigate@mirror.co.uk
