'Delusions of quick riches': UK watchdog warns after Kim Kardashian promotes crypto token

"But she didn't have to disclose that Ethereum Max — not to be confused with Ethereum — was a speculative digital token created a month before by unknown developers — one of hundreds of such tokens that fill the crypto-exchanges," Randell said at the Cambridge International Symposium on Economic Crime.

Cryptocurrency pump and dump schemes have quickly emerged as an easy way to dupe individuals by launching crypto assets like tokens, NFTs and more. Such scams often use social media influencers to promote their assets to quickly make money before disappearing, as reports highlight.

Individuals often buy cryptocurrencies based on a fear of missing out, or FOMO. Recent studies have found that social media and FOMO play a large role in driving new investors to buy cryptocurrency assets.

But with many cryptocurrencies having no underlying value or use case to them, the prices and trading of such assets are driven by pure speculation even in the case of larger tokens like Bitcoin.

"There is no shortage of stories of people who have lost savings by being lured into the cryptobubble with delusions of quick riches, sometimes after listening to their favourite influencers, ready to betray their fans' trust for a fee," said Randell.

The UK treasury and the Bank of England are in the process of experimenting with CBDCs, a type of cryptocurrency that has been pegged to a real fiat currency.

Such tokens, known as stablecoins due to being pegged to underlying assets, may soon see wider adoption.

Former RBI governor Raghuram Rajan recently highlighted that stablecoins and future use cases cryptocurrencies may hold value as they become regulated.

“I think there will be use cases that will emerge -- stablecoins, properly regulated, have a future,” Rajan said at Reuters Global Market Forums on August 25.

“I think some cryptos, even though they have fluctuating values, might find a way to become an effective means of payment. Cross-border payments is one area which is wide open, because of the huge transaction costs of making (such) payments,” added Rajan.