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The Effect of Celebrity Endorsements on Crypto: Evidence from Initial Coin Offerings (ICOs)

SSRN Electronic Journal
2024
  • 1
    Citations
  • 3,034
    Usage
  • 4
    Captures
  • 2
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    1
    • Citation Indexes
      1
  • Usage
    3,034
    • Abstract Views
      2,495
    • Downloads
      539
  • Captures
    4
  • Mentions
    2
    • News Mentions
      2
      • 2
  • Ratings
    • Download Rank
      104,919

Most Recent News

Celebrities boost crypto projects but don’t guarantee legitimacy

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Article Description

We study the relation between celebrity endorsements and cryptocurrency outcomes, focusing on initial coin offerings (ICOs) of utility tokens. Using a global sample of 1,500 ICOs across 95 countries, our findings show that celebrity endorsements help issuers achieve higher fundraising goals and increase capital raised, thereby enhancing initial success. However, these endorsements often replace traditional demand-generating mechanisms, such as pre-sales, undermining pre-ICO price discovery processes. Despite their influence on early-stage outcomes, celebrity endorsements do not correlate with greater long-term success, such as the development of working products or platforms. Notably, celebrity-endorsed ICOs are more likely to be associated with scams, particularly when paired with extended vesting periods that obscure market signals. We also identify specific features of celebrities' social media promotions that amplify both fundraising potential and fraud risks. Endorsements from celebrities with expertise aligned to the ICO project's focus mitigate some risks, emphasizing the importance of source credibility in shaping investor trust. These findings highlight the double-edged role of celebrity promotions in speculative markets, offering valuable insights into their influence on investor behavior and issuer strategies.

Bibliographic Details

Joshua T. White; Sean Wilkoff

Elsevier BV

Celebrities; Promotions; Endorsements; Cryptocurrency; Blockchain; Initial Coin Offerings; Digital Assets; Capital Formation; Price Discovery

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