Rapper and cryptocurrency fan Soulja Boy “kept it 2017” Wednesday when he revealed he was being paid to promote a possible Ponzi scheme. The apparent accident could expose him to punitive action by the U.S. Securities and Exchange Commission, which handed out big fines and settlements when public figures including DJ Khaled, Floyd Mayweather and Paris Hilton promoted so-called initial coin offerings.
Soulja (or, more likely, a social media intern who is currently updating his or her resume) included the terms of his compensation in a tweet promoting a token called SaferMars. The tweet seemed designed to appear organic, with Soulja claiming he had “found an interesting project” that “looks moon worthy.”
But the last line of the tweet, which went out to Big Draco’s 5.2 million Twitter followers, revealed that Soulja didn’t just “find” the project: “They raising 240k, if they raise it after your tweet – will get you 24k.” (sic)
Weirdly, the error may not actually be as dire as it seems. It must have eroded trust in Soulja Boy’s recommendations, but it could also act as a degree of legal cover.
You see, the Securities and Exchange Commission (SEC) has strict rules against what it calls “touting.” This is defined as promoting an investment, in exchange for payment, without disclosing that payment. It’s somewhat similar to the rules for advertising products, which require things like paid celebrity Instagram ads to be clearly marked “sponsored” or something similar.
Failure to disclose payment was at the root of several prior SEC actions against celebrity crypto promoters. In November of 2018, Mayweather and Khaled both reached massive settlements with the SEC after promoting an ICO called Centra without disclosing that they’d been paid to do it. Rapper T.I. reached a smaller settlement over similar charges. Actor Steven Seagal was hit with touting charges last year in connection with a project called Bitcoiin2Gen.
Most celebs seem to have learned their lesson: Figures like Paris Hilton, who also did some questionable promotion during the ICO boom, have instead pivoted to promoting non-fungible tokens (NFT). That may be less risky because the digital collectibles are probably not securities. But Soulja Boy, it seems, has doggedly stayed the crypto-shill course.
Despite having a name similar to the recently surging SafeMoon token, SafeMoon developers have said there is no affiliation between their project and SaferMars. That suggests an attempt to misdirect interest from another project.
The SaferMars website, meanwhile, is focused on token price rather than utility, which is never a good sign. That and the apparent willingness to gain mindshare through undisclosed paid promotion should both be regarded as red flags for anyone considering putting money in SaferMars. It also matters for Soulja Boy, because the SEC is generally much less forgiving of promoters of outright scams and frauds than of those who break the rules while promoting more legitimate investments.
There is one tiny silver lining in Soulja’s Twitter mishap. If the SEC eventually takes action against him, Soulja’s lawyer could argue that “will get you 24k” acted as a disclosure, aligning the SaferMars tweet with anti-touting rules. The SEC is unlikely to buy that argument, Anderson Kill lawyer Stephen Palley told CoinDesk. And it might not help that Soulja has since deleted the original tweet and replaced it with a version removing the financial details. But at least it’s something to work with.
The much bigger problem for Soulja Boy is that if the SEC took an interest, it would probably be looking for other deals that Soulja might not have disclosed at all. A quick review of Soulja Boy’s Twitter feed shows endorsements not just of SafeMars, but also dozens of tweets promoting HOKK, apparently a doge-influenced memecoin.
Soulja’s Twitter presence suggests he may still be open to, um, collaboration with crypto projects: Just hours after the SaferMars misfire, he was looking for recommendations for “the best new upcoming token.”
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