Social Media Influencers and Celebrities Promoting ICOs on the Radar of the SEC

The United States Securities and Exchange Commission (SEC) is on an active hunt of ICOs with a number of cases on its radar. The SEC is not only targeting companies conducting the ICOs, but also celebrities and other social media influencers who are promoting it.

Three days back, the SEC charged music producer DJ Khaled and professional boxer Floyd Mayweather for crypto-related crime and fraud. The two celebrities have been charged as they failed to disclose their payments received in cryptocurrencies for the promotion of ICOs.

Tightening up the screws further, several other social media influencers can be in trouble if the SEC finds that they have received compensations in promoting ICO tokens and related products, and failed to publicly disclose the amount they have received for the same.

Last year itself, the SEC had warned saying “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”.

Last Friday, November 30, the SEC warned investors getting swayed by celebrity endorsements in two different tweets. The first one reads: “Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements.”

In the continuing tweet, the agency continued: “Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds.”

Furthermore, the SEC is quite firm on its stand that all ICOs can be treated as securities. Last Tuesday, hacked.com reported that the SEC chairman - Jay Clayton views most ICOs as securities in the global markets.

Clayton remarked: “We don’t believe Bitcoin is a security. Many of the ICOs that you see and you talk about, they are securities. And if you’re going to offer or sell securities, you have to do so in compliance with our laws. We’ve been clear about that, the recent actions further emphasized that our securities laws to apply to the ICO space, and if people are going to raise money using initial coin offerings they either have to do so in private placement or register with the SEC.”

After the recent fine levied on Khaled and Mayweather, a warning bell is already rung for celebrities who in one or the other way may be involved with ICO promotion.