Three Celebrity Crypto Scandals That Defined an Era
Celebrities and crypto scandals are like two peas in a pod. We review some of the strangest from years past.
It’s hard to imagine now, but there was a time when crypto and scandal were not such familiar bedfellows. By the end of the 2010s, Bitcoin had been around long enough to gain attention. People had a vague idea of what it was. So, when its competitors entered the market, ballooning prices and eager celebrities looked like the perfect recipe for disaster.
We have reviewed some of the industry’s most entertaining celebrity crypto scandals from an era when people didn’t tiptoe around the technology as much as they do today.
John McAfee and the Altcoin Pump and Dump
Anyone who has used a computer will remember John McAfee, the antivirus software pioneer whose former company still bears his name.
In March 2021, the antivirus titan and his bodyguard, Jimmy Gale Watson, were indicted on fraud and money-laundering conspiracy charges stemming from two cryptocurrency schemes. Authorities accused McAfee of using his large Twitter following to artificially inflate prices of altcoins in a pump-and-dump scheme. He also faced charges of hiding payments McAfee received from startup businesses to promote initial coin offerings. McAfee reportedly made over £13 million from these schemes. FBI Assistant Director William F. Sweeney Jr. called the case “an age-old pump-and-dump scheme.”
The Commodity Futures Trading Commission (CFTC) also filed civil charges.
However, only a few short months later, McAfee was found dead in his jail cell near Barcelona in an apparent suicide. Hours earlier, a court approved his extradition to the United States to face tax charges punishable by decades in prison. In a settlement, his bodyguard was ordered to pay over $290,000. In light of McAfee’s passing, the authorities chose not to pursue the case.
Here is a rare instance of a celebrity crypto scandal where the culprit probably knew what he was doing. In so many cases, celebrities are either naive or convinced they can get away with it. Arguably, McAfee was neither.
Paris Hilton and LydianCoin
Before becoming a member of the Bored Ape Yacht Club (BAYC) and helping to pique the world’s interest in NFTs, Paris Hilton had a less-than-glamorous part in the “ICO summer.” That period became infamous for the surge in popularity of initial coin offerings (ICOs). A fundraising method in which companies offered their crypto coins and tokens in exchange for funding. Many new projects launched, some promised to revolutionize industries, others were scams, but most simply failed to live to up the hype.
Paris Hilton was one of its first celebrity victims. On September 3, Hilton leveraged her celebrity bona fides on behalf of LydianCoin. A Singapore-based firm that aimed to raise $100 million through its ICO. The tweet read:
Looking forward to participating in the new @LydianCoinLtd Token! #ThisIsNotAnAd #CryptoCurrency #BitCoin #ETH #BlockChain pic.twitter.com/a8kT9eHEko
But it appears Hilton did not do her due diligence. The coin appeared to have little utility. It was also linked to a company called Gravity4, which had a history of legal problems and regulatory violations. In addition, the founder of Gravity4, Gurbaksh Chahal, had a controversial past, which included a conviction for domestic violence.
As concern mounted, eyes turned to Hilton for an explanation. Before the end of the month, the celebrity heiress had deleted the tweet.
However, Hilton is an example of a celebrity who left and reentered the market with more knowledge. She claims to have first invested in Bitcoin and Ether in 2016. The heiress was also quick to jump into NFTs, creating her first in 2019. Since then she has hosted parties in the metaverse, and has partnered with The Sandbox for her own virtual space centered around fashion, music, and animals.
Steven Seagal and “Bitcoiin”
Steven Seagal hasn’t made big movies since the 1990s. Until recently, he still starred in action flicks, but most have gone directly to DVD or streaming services. So in 2018, it’s possible the film legend was in need of a little cash.
In 2018, Seagal was brought on as a ‘brand ambassador’ for Bitcoiin2Gen. A press release that Seagal shared claimed it would make a “superior or more advanced version of Original Bitcoin.” A spurious claim, to put it mildly.
Seagal was promised $250,000 in cash and $750,000 worth of B2G tokens in exchange for his social media promotions. He “wholeheartedly” endorsed the coin’s ICO in a press release.
In 2020, the SEC ruled that Seagal violated anti-touting provisions of federal securities laws during his time as a “brand ambassador” for “Bitcoiin.” The elderly actor agreed to pay $314,000 in disgorgement and penalties in a settlement. Although he did not admit or deny the SEC’s claims. Seagal also agreed not to promote any securities, including digital securities, for three years.
It will surprise nobody to learn that the project is now defunct. If anyone is interested, the domain Bitcoiin.com is available for sale at the bargain price of $13,299.
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