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SEC: Celebrity ICO Endorsements Could Be Illegal
Celebrities who endorse initial coin offerings may be in violation of the law, the SEC said today.
By Stan Higgins
Updated Sep 13, 2021, 7:06 a.m. Published Nov 1, 2017, 9:02 p.m.
The U.S. Securities and Exchange Commission (SEC) has issued a warning to investors about celebrity-endorsed initial coin offerings (ICOs).
The SEC – which released a wide-ranging statement on the blockchain use case in late July – said today that celebrities who endorse token sales may run afoul of "anti-touting" laws if they don't correctly state what compensation, if any, they may have received.
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The agency said:
"Celebrities and others are using social media networks to encourage the public to purchase stocks and other investments. These endorsements may be unlawful if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement."
In recent months, celebrities such as actors Jamie Foxx and William Shatner, boxing champ Floyd Mayweather, Jr., and hotel heiress Paris Hilton, among others, have publicly endorsed several projects ahead of their respective token sales.
The SEC also warned potential investors to not base their decisions solely on the endorsement of a celebrity.
"Investors should note that celebrity endorsements may appear unbiased, but instead may be part of a paid promotion. Investment decisions should not be based solely on an endorsement by a promoter or other individual," the agency wrote.
SEC emblem image via Shutterstock
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