Can Davido pay Kim Kardashian’s price?
Did you just think you read if Davido could pay Kim Kardashian’s bride price? As I wrote the first draft of this post, that’s how it sounded to me, too. But no, this post isn’t about Davido marrying K
Kim Kardashian needs no introduction. Or does she? Even if you didn’t watch the hit reality television series Keeping Up with the Kardashians, you probably would have heard or read something about her. And from the fame she garnered on the show, she has launched successful luxury beauty and fashion companies. Today, the media personality-cum-businesswoman is worth around $1.8 billionaire, according to Forbes. Of no doubt, Kardashian is an embodiment of what people call the “American dream.”
In June 2021, the period when cryptocurrencies were enjoying some euphoria, especially among youths, Kardashian posted a story to her over 330 million Instagram followers. The post was about an ad for a cryptocurrency called EthereumMax.
See the post below:
So here’s the thing about social media influencing: influencers have established credibility in a specific industry, have access to a huge audience and can persuade others to act based on their recommendations. In fact, influencer marketing has fast evolved to become a key tool in a company's arsenal. When done right, influencer marketing can make an obscure company become known overnight and enjoy high patronage. Even renowned companies aren’t joking with influencer marketing these days. Representing companies and promoting their products have fast become a lucrative career for people with large social media followings.
It was, therefore, not surprising that after touting EthereumMax, many of Kardashian’s followers and fans bought the cryptocurrency, even though the celebrity added the caveat, “This is not financial advice.”
What happened afterwards was a mess.
The thing is EthereumMax is not related to Ethereum, the second-largest cryptocurrency by market cap, after Bitcoin. However, the EthereumMax token is built on top of the Ethereum blockchain. I’m sorry if the jargon put you off. Just be patient with me, we’ll be out of here shortly. And like many cryptocurrencies, EthereumMax promises to reshape the future of finance in exaggerated terms. It screams at investors to add it to their portfolios. Its promoters did a good job of making investors believe they were losing out if they didn’t buy it.
Their tactic actually worked. With flashy names like Kardashian promoting it, EthereumMax won investors over.
However, some days after the reality show star’s Instagram post, the price of EthereumMax, or EMAX, fell by 50 per cent and the volume of trade in the token dropped by nearly 75 per cent. The price of the coin never recovered, so anyone who followed Kardashian’s advice lost out. It would soon be alleged that EthereumMax’s founders used celebrities to drive up prices, and then sold their tokens, leaving everyone else hanging. It’s called “pump and dump” in the crypto world.
What happened afterwards?
So after losing out, apparently after discovering that EMAX was a pump and dump, numerous investors filed a class-action suit against Kardashian over allegations she misled investors by promoting EthereumMax, a little-known cryptocurrency, to her millions of social media followers.
Former NBA star Paul Pierce and retired boxing champ Floyd Mayweather, who also promoted the cryptocurrency, were joined in the suit.
The investors said they only bought EMAX after learning of it through the publicity brought by Pierce, Mayweather and Kardashian’s endorsements.
On Monday, 3 October, the United States’ Securities and Exchange Commission (SEC) said Kardashian failed to disclose she was paid $250,000 for the Instagram post promoting EthereumMax, in violation of US federal securities laws.
As a penalty, Kardashian was fined $1.26 million, which she has reportedly paid. She also agreed not to promote any crypto assets for three years, SEC said.
Davido’s turn
Away from Kardashian’s situation, let’s turn to Davido (real name: David Adeleke), one of the biggest celebrities in Nigeria and Africa as a whole. Like Kardashian, Davido has millions of fans, both online and offline, across the country. It is, therefore, not unexpected that when he says something about a brand, his millions of fans would listen to him.
Like Kardashian, Davido did also promote a brand that has now turned out to be a scam. The investment platform, called Racksterli, was founded by Michael Oti, also known as Black Gold.
Racksterli came in 2020 amid the COVID-19 crisis that saw many Nigerians lose their jobs and businesses. Many who were desperate to get alternative means of income saw Racksterli as a way out of their predicament.
The investment platform offered mouth-watering packages that could make any unwary investor put all their life savings into it. For example, if you invested N14,000, you were guaranteed payment of N21,600 within 30 days. The highest tier of the investment was expected to earn an investor N9.3 million for an investment of N20 million.
If you were familiar with schemes like this, you would know that they don’t last. They are designed to pay the first and, maybe, second sets of ‘investors’, after which any new sets of investors are guaranteed to lose out. They are Ponzi schemes, after all. Any Nigerian should know this. Unfortunately, it is baffling that people keep falling for these so-called investments every now and then. Of course, greed and fear always have roles to play. Fear of missing out lures more people while greed makes those who are already into them keep re-investing their earnings.
Like EthereumMax founders, Racksterli founder, Oti, understood the leverage celebrity marketing provides, so he recruited Davido to help promote his scheme.
In a 30-second video on social media, Davido said, “What’s up everybody? I wanna introduce you guys to one of the biggest investment platforms in Nigeria, racksterli.com. Make sure you visit the website and invest. There are lots of opportunities over there. With Racksterli, you get paid between 12 to 24 hours, you get paid instant payment. It has been very reliable for the past six months.”
What Davido didn’t disclose was the fact that he would have been paid by Oti to endorse the platform, the very sin Kardashian committed in the US.
Racksterli, which was also endorsed by celebrities Nancy Isime and Williams Uchemba, claimed investors’ funds were diversified into real estate, forex trading, cryptocurrencies and other business ventures.
But over two years after Davido fans and followers poured their money into the scheme, they have gotten no returns. I know some of these victims and they are unlikely to be ever paid, both their capital and returns. According to an FIJ report, Racksterli defrauded 422,305 subscribers. One told me sometime last year she put her life savings into it simply because the platform was endorsed by Davido.
Oti’s Instagram page shows him living a luxury lifestyle, posing with a black Mercedes-Benz G-Wagon, likely his own, and doing other big-boy stuff. It is what it is about investment scams.
Right now, the platform’s website has even been deleted as can be seen in the screenshot taken on my laptop below:
Can Davido pay Kardashian’s price?
So back to the question. While Kardashian has been heavily fined for endorsing a pump-and-dump cryptocurrency, Davido and other celebrities who promoted Racksterli still groove on. No apology to fans. No sanction by the SEC or whatever agency is in charge of stuff like that in Nigeria. Can Nigeria copy a thing or two from the US? Also, can Racksterli investors learn a thing or two from their EthereumMax counterparts?
This post is not about throwing shade at any celebrity, but it is about accountability and pushing for a better society. While they are not liable for people’s financial decisions, celebrities have the burden of full disclosure when promoting brands, particularly those in the league of Racksterli. I know these endorsements swell their bank accounts, but if they also had their fans’ interests at heart, life would judge them differently.
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With love,
Jesusegun