You can find your favorite celebrities hawking everything from watches to fragrances and in this day and age, you’ll find some of them promoting relatively unknown cryptocurrencies as well. This isn’t something that the Securities and Exchange Commission is fine with. It has issued a statement warning celebrities that they may be breaking the law if they make paid endorsements of cryptocurrencies without disclosing that they’ve been paid for it.
In recent months, celebrities with particularly strong following on social media like Floyd Mayweather and Paris Hilton have started promoting new virtual currencies through their accounts.
These are cryptocurrencies that many people haven’t even heard of, but as billions of dollars are now being raised as part of initial coin offerings, these endorsements are being very common.
Some of these cryptocurrencies have questionable people behind them. A recent investigation by Forbes found that LydianCoin, a virtual currency endorsed by Paris Hilton, was founded by a person “being sued by at least four former employees for harassment and discrimination.” The same person was also potentially looking at jail time over allegations of domestic violence.
Mayweather recently endorsed a cryptocurrency called Centra. The company’s website listed a president who doesn’t exist. It also claimed that it would provide a Visa or MasterCard-based debit card so that people could spend the currency but both Visa and MasterCard confirmed to The New York Times that they were never approached by Centra.
It’s no surprise that the SEC is warning celebrities to be more diligent about this. “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,” it said in a statement, adding that a failure to disclose this information would be a violation of the anti-touting provisions of the federal securities laws.
Filed in . Read more about Cryptocurrencies. Source: arstechnica