The fintech world has seen more than its shares of dramatic ups and downs over the last decade. While it might be thought that the success or failure of individual companies is due to superior product offerings or business strategy, some of the market’s recent high-profile fintech implosions have shown just how much impact an influencer can have on the fate of a particular company or cryptocurrency.
Unfortunately, the phenomenon that columnist Vladimir Gorbunov describes as the “Elon Effect” tends to lead more frequently to negative consequences than positive ones in the long run. While a high-profile endorsement from a digital influencer like Elon Musk can quickly take a company’s value to a new level, these spikes in popularity tend to be short-lived. Worse, the attention brought by the actions of a major influencer can ultimately bring down an otherwise healthy company.
Even influencers outside the tech world can bring major negative attention upon the fintech industry. One need look no further than Kim Kardashian, whose promotion of EthereumMax led to a penalty from the SEC. “This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” said SEC Chairman Gary Gensler at the time of that incident.