Celebrities who endorse and advertise ICOs and other cryptocurrencies have been warned by the SEC.
Just recently, Initial Coin Offerings have become the new and trending investment opportunities. According to some sources, ICOs managed to raise a total amount of $3 billion. ICOs are popular for huge return of investment in a short time period. In some cases investors could see returns as high as 1000% in just a couple of weeks.
It’s not a surprise that with this ICO craze celebrities targeted this new investment opportunity. In the last months, a lot of ICO projects have been endorsed and promoted publicly by popular celebrities. One of the most known ICO promotion happened with Jamie Foxx who promoted the Cobinhood ICO on his Twitter account. Sadly, he wasn’t the only one to do so — Dj Khaled, a famous musician, promoted ICOs on his Instagram which went viral.
SEC warns celebrities to be careful on how they promoted ICOs and cryptocurrencies because in some cases they could be promoting fraudulent products and projects.
In the recent report the SEC states:
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 SEC’s Enforcement Division and Office of Compliance Inspections and Examinations encourage investors to be wary of investment opportunities that sound too good to be true. We encourage investors to research potential investments rather than rely on paid endorsements from artists, sports figures, or other icons.
SEC also advises investors to be more careful when deciding on a project to invest in and don’t rely on famous people they have seen online.
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