In the latest commercial from the virtual currency exchange Crypto.com, titled “Bravery Is a Process,” star basketball player Joel Embiid walks through Philadelphia while Bill Self, his former college coach, lends the narration.
“Even when our path didn’t make sense to everyone, we kept going,” says Mr. Self in the ad, which made its debut on May 6. “We go on, until our path is the path they’d taken.”
What the ad doesn’t say: The crypto market is in the midst of a meltdown. Attention buyers.
The enthusiasm for crypto of Hollywood celebrities and top athletes reached a fever pitch in the past year. On social media, in interviews and even in music videos, they portrayed virtual currencies as a world with its own hip culture and philosophy – one that was more inclusive than traditional finance and offered the chance to make tons of money.
The Super Bowl was nicknamed the “Crypto Bowl” this year because so many ads — costing a whopping $7 million for 30 seconds — feature the industry, several with names in bold.
But after investors saw hundreds of billions of dollars disappear in a sell-off this month, those famous boosters are now facing mounting criticism for encouraging vulnerable fans to invest in crypto without emphasizing the risks. Unlike clothes or snacks or many other products sold by celebrities, the crypto market is volatile and full of scams.
“This is real money that people are investing in,” said Giovanni Compiani, an assistant professor of marketing at the University of Chicago, whose research has found that younger, lower-income investors tend to be overly optimistic about crypto’s trajectory. “Those promoting it need to be more candid about the potential downsides.”
Read more about the world of cryptocurrencies
Until now, crypto celebrity boosters have been largely silent about whether they have any doubts about their promotions.
Crypto.com declined to make Mr. Embiid available to discuss his partnership with the company. Matt Damon, who compared the advent of virtual money to the development of aerospace in a critically panned but widely seen Crypto.com ad last year, did not respond to requests to weigh in. Also no response from basketball star LeBron James, who was featured in the company’s Super Bowl commercial this year.
Reese Witherspoon, an Oscar winner who stated online in December that “crypto is here to stay,” did not respond to a request for comment. Nor Gwyneth Paltrow, another Oscar winner, who lent her name to a Bitcoin giveaway late last year.
Paris Hilton, who has nearly 17 million followers on Twitter who see her cooing over her lap dogs Crypto and Ether, did not respond to a request for comment. Neither did several other famous crypto pushers, such as Mila Kunis, Aaron Rodgers, and Tom Brady (although Mr. Brady and Mr. Rodgers’ profiles on Twitter still feature laser eyes, a popular symbol of Bitcoin bullishness). A representative of Naomi Osaka, the tennis star who became an ambassador for the crypto exchange FTX this year, wrote in an email that “sadly she is abroad and unavailable.”
In FTX’s Super Bowl commercial, comedian Larry David downgraded major inventions like the wheel and the light bulb before rejecting crypto. The ad urged viewers to wink, “Don’t be like Larry.”
Jeff Schaffer, the director of that Super Bowl spot, said in an email that he and Mr. David had no comment on the market collapse.
“Unfortunately, I don’t think we have anything to add because we have no idea how cryptocurrency works (even after explaining it to us repeatedly), don’t own it and don’t follow the market,” he said. † “We just wanted to make a funny commercial!”
Crypto’s instability underscores a fundamental misconception of celebrity marketing: A celebrity’s endorsement may be momentous — the actor John Houseman’s spots for the Smith Barney investment firm decades ago are Madison Avenue’s legend — but it makes the product that becomes pushed not intrinsically worth trying.
“This is what they do — they’re celebrities, they were offered money to promote something that shows promise,” said Beth Egan, an associate professor of advertising at Syracuse University.
Expand your cryptocurrency vocabulary
Map 1 of 9
Bitcoins. A Bitcoin is a digital token that can be sent electronically from one user to another, anywhere in the world. Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved.
blockchain. A blockchain is a jointly maintained database that reliably stores digital information. The original blockchain was the database where all Bitcoin transactions were stored, but non-currency based companies and governments are also trying to use blockchain technology to store their data.
Coinbase. Coinbase, the first major cryptocurrency company to list its shares on a US exchange, is a platform that allows people and businesses to buy and sell various digital currencies, including Bitcoin, at transaction fees.
web3. The name “web3” is what some technologists call the idea of a new kind of internet service built with blockchain-based tokens, replacing centralized business platforms with open protocols and decentralized community-run networks.
DAOs. A decentralized autonomous organization, or DAO, is an organizational structure built with blockchain technology often described as a crypto cooperative. DAOs share a common goal, such as investing in start-ups, managing a stablecoin, or buying NFTs.
But it was not without risk, Mrs. Egan said. If the crypto industry had continued to thrive – or if it returns to its high-flying status – the endorsers could be commended. But if the downturn continues, their reputation could suffer.
“If I were Matt Damon or Reese Witherspoon, I’d question my willingness to take on these kinds of gigs,” she said.
In March, Crypto.com spent an average of $109,000 a day on digital advertising, according to estimates from the ad analytics platform Pathmatics. In May, that dropped to $24,669 a day.
Spending at FTX, one of the crypto firms most aggressively using celebrity promoters, fell to $14,700 a day this month from $26,400 a day in March, according to Pathmatics.
“We started this arms race,” Brett Harrison, the president of FTX’s US arm, said of the use of celebrity endorsers in an interview with DailyExpertNews before the Super Bowl in February. Famous FTX ambassadors include Mr. David, Mr. Brady and his supermodel wife, Gisele Bündchen, the golfer Albane Valenzuela, the football player Aaron Jones, the basketball player Stephen Curry and the baseball player Shohei Ohtani.
“We planted our flag there and we have such a strong presence that racing to grab all the remaining properties and athletes and celebrities is not necessarily our top priority,” he said.
But the company, which would most likely “spend quite a significant amount more” on marketing, is now focusing on reaching different demographics and pursuing more low-key tactics, such as digital campaigns and Google ads, he said.
“We’re thinking about doing things a little differently than in the past,” he said.