Concerns Arise Over Celebrity-Backed Cryptocurrencies Exploiting Traders

Onchain data has revealed a troubling trend in the cryptocurrency realm – the rise of celebrities launching their own tokens and profiting significantly, often at the expense of unknowing traders. Recent instances involving JENNER and DAVIDO tokens have acted as cautionary anecdotes for potential investors.

The Jenner Token Controversy

According to blockchain analysis firm Lookonchain, former Olympic athlete and reality TV personality Caitlyn Jenner garnered 2,381 SOL (around $405,000) within four days by initiating 12 meme coins on the Solana blockchain. Investigations showed that Jenner created multiple new addresses to purchase the tokens she had issued, subsequently selling them for considerable gains.

Among Jenner's tokens, $JENNER stood out as particularly lucrative. On May 27, she invested 1.3 SOL ($221) to acquire 44.56 million $JENNER tokens on the Pump.fun platform. She swiftly offloaded the entire stack for 253 SOL, translating to a profit of 252 SOL (approximately $43,000).

Davido’s Token Triumph

Renowned Nigerian musician Davido, boasting a massive following of over 30 million on Instagram, followed a similar trajectory with his $DAVIDO token. Lookonchain reported that Davido kickstarted with 7.5 SOL ($1,275) as initial capital, creating the $DAVIDO token and purchasing 203 million tokens (20.3% of the total supply) for 7 SOL ($1,190) on Pump.fun.

Within 11 hours, Davido swiftly sold 121.88 million $DAVIDO tokens, amassing profits of 2,783 SOL (about $473,000). Additionally, he retains 61.12 million $DAVIDO tokens, signifying an unrealized profit of around $207,000.

Trader Losses and Caution

Lookonchain's data highlighted significant losses by traders engaging with the $JENNER token. One trader, who previously earned $3.7 million in just five days trading the $BOME token, incurred a loss of 785 SOL (roughly $133,400) in a single day trading $JENNER.

Cryptocurrency analysts and industry experts have cautioned traders about the hazards tied to celebrity-backed tokens, often lacking practical utility and primarily influenced by hype and speculation.

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As the trend of celebrity-led crypto ventures gains momentum, regulatory bodies are taking notice. Several jurisdictions are contemplating measures to shield investors from potential fraud and manipulation, particularly concerning influential figures promoting speculative assets.

While the crypto sector remains largely unregulated, the recent incidents involving JENNER and DAVIDO tokens have reignited calls for enhanced oversight and consumer safeguarding measures.