In recent years, celebrities have rushed into the cryptocurrency space, leveraging their fame to launch so-called “celebrity tokens”. These digital assets, often tied to a known name rather than any fundamental value, have captivated investors eager for quick gains. While the phenomenon is not new — dogecoin, initially a joke, soared in value after Elon Musk’s social media endorsements. The latest wave of celebrity-backed tokens has reignited concerns over speculation, market manipulation, and the risks facing everyday investors.

Just before Donald Trump returned to the White House, he became the latest high-profile figure to embrace the crypto frenzy. His namesake token, $TRUMP, saw a meteoric rise to $75 from its initial price of 18.24 US cents, briefly pushing its market capitalization past $15 billion, only to plummet more than 65 percent shortly thereafter. This roller-coaster trajectory epitomizes the volatile and speculative nature of “meme coins”.

The mechanics of celebrity tokens are often predictable. Many celebrities or their affiliated teams receive large allocations of the tokens before they become publicly tradable. As excitement builds and retail investors pile in, the price surges — at which point insiders can sell at a significant profit. By the time the hype fades, unsuspecting investors are left holding tokens that are often worth a fraction of their purchase price. This “pump and dump” dynamic, while common in crypto markets, is particularly problematic when amplified by the influence of household names.

Adding to the complexity, not all celebrity tokens are directly created by the stars themselves. In many cases, third parties launch these coins using a celebrity’s image or brand, with the individual receiving a cut of the proceeds. Sports stars and musicians, for example, have lent their names to fan tokens or NFTs (nonfungible tokens), turning personal brands into tradable assets. While some of these ventures are legitimate, many fall into a legal and ethical gray area, raising questions about transparency and consumer protection.

As the crypto market evolves, there will undoubtedly be new waves of speculative mania. Whether it’s another celebrity token or a viral meme coin, the fundamental lesson remains unchanged: The more something is hyped, the more carefully it should be scrutinized. In finance, as in life, not everything that glitters is gold

This phenomenon is not confined to the West; its echoes are strongly felt in Asia, particularly in Hong Kong. The city is still grappling with the fallout from the JPEX scandal, a stark reminder of the dangers of influencer-driven hype. While not strictly a celebrity token program, the case saw an unlicensed virtual asset trading platform heavily promoted by online personalities and local celebrities, leading to over HK$1.6 billion ($203.8 million) in alleged fraud and thousands of victims. It underscores a painful lesson: The endorsement of a familiar face, whether a global superstar or a local influencer, offers no guarantee of a project’s legitimacy. The incident has spurred Hong Kong’s regulators, including the Securities and Futures Commission, to tighten oversight and issue public warnings, highlighting the critical tension between fostering a vibrant virtual asset hub and protecting the public from predatory schemes.

Globally, regulators are scrambling to keep pace. The United States’ Securities and Exchange Commission has taken enforcement actions against celebrities who promote digital assets without disclosing their financial ties. Several well-known figures have been fined for failing to inform investors that they were paid to endorse certain cryptocurrencies. Despite these crackdowns, the result is a complex and often inconsistent patchwork of rules, leaving the broader market largely underregulated and retail investors vulnerable to the whims of online speculation.

The risks associated with celebrity tokens go beyond price volatility. Many of these projects lack clear-use cases, governance structures, or transparency regarding token distribution. Without proper oversight, they become easy targets for manipulation, with insiders able to influence prices through coordinated buying and selling. For investors who assume a famous name translates to credibility, the reality can be sobering: A token’s success is often dictated by fleeting social media trends rather than sustainable value creation.

For those tempted to invest in celebrity-backed cryptocurrencies, a few fundamental principles should be kept in mind. First, skepticism is crucial. Any token that relies primarily on a famous figure for its appeal is, by definition, speculative. Investors should assess whether the underlying project has a genuine utility beyond hype. Second, transparency matters. Understanding who controls the supply of tokens and how they are distributed can reveal whether a project is structured for long-term growth or merely a cash grab. Finally, financial decisions should never be based solely on celebrity endorsements. While public figures can generate excitement, their involvement does not guarantee legitimacy or stability.

Ultimately, the rise of celebrity crypto tokens highlights a broader challenge in the digital asset space: the tension between innovation and speculation. While blockchain technology holds promise for decentralization and financial inclusion, its misuse in pump-and-dump schemes undermines trust in the industry. Regulators must strike a balance between fostering innovation and protecting consumers from predatory practices. In the meantime, investors would be wise to remember that in the world of crypto, fame is no substitute for substance.

As the crypto market evolves, there will undoubtedly be new waves of speculative mania. Whether it’s another celebrity token or a viral meme coin, the fundamental lesson remains unchanged: The more something is hyped, the more carefully it should be scrutinized. In finance, as in life, not everything that glitters is gold.

The author is chairman of the Asia MarTech Society and sits on the advisory boards of several professional organizations, including two universities.

The views do not necessarily reflect those of China Daily.