SEC: Celebrity ICO Endorsements Could Be Illegal

Celebrities who endorse initial coin offerings may be in violation of the law, the SEC said today.

AccessTimeIconNov 1, 2017 at 9:02 p.m. UTC
Updated Sep 13, 2021 at 7:06 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

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 Julysaid 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.

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

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.