American financial regulator Securities and Exchange Commission (SEC) issued yesterday a warning for all celebrities promoting an Initial Coin Offering aka ICO or other such investments. SEC also warned the retail investors about the dangers of relying solely on celebrity endorsements.
“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. A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws. Persons making these endorsements may also be liable for potential violations of the anti-fraud provisions of the federal securities laws, for participating in an unregistered offer and sale of securities, and for acting as unregistered brokers,” SEC said in a public statement.
Investment decisions should not be based solely on an endorsement by a promoter or other individual.
This year alone, many worldwide public figures went ahead and endorsed several ICOs on their social media accounts. Public figures like future boxing Hall of Famer Floyd ‘Money’ Mayweather, actor Jamie Foxx or multi-talented by Wikipedia’s standards Paris Hilton.
SEC also warned the ICO investors who take these endorsements highly. “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. Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws. Conduct research before making investments, including in ICOs,” the US financial regulator added.