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Celebs warned against peddling cryptocurrencies

by on02 November 2017

Because they might go to jail

The US Securities and Exchange Commission (SEC) has issued a blunt warning on celebrities using social media to buy stocks and other investments related to the promotion of Initial Coin Offerings

The SEC said: “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.”

The statement added that investors to be “wary of investment opportunities that sound too good to be true”.

Investors should instead research the investments for themselves and not base decisions on endorsements from sports figures or artists.

Cryptocurrencies may be regarded as securities in the USA and so must comply with federal security laws.

“Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope and amount of compensation received in exchange for the promotion.”

The SEC warns that endorsements from celebrities could well be part of a paid promotion, and celebs themselves don’t have sufficient expertise to deliver this kind of advice.
It concludes: “Never make an investment decision based solely on a celebrity endorsement, or other information you receive through social media, investment newsletters, online advertisements, email, investment research websites, internet chat rooms, direct mail, newspapers, magazines, television or radio.”

Last modified on 02 November 2017
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