ICO Regulations – SEC warned celebrity-approved initial coin offerings could be illegal
November 8, 2017 11:21 am
ICO Regulations – The US Securities and Exchange Commission (SEC) has warned that the initial coin offerings (ICO) that are endorsed by celebrities could be illegal.The commission said the person who promotes token sales would not violate “anti-touting” laws if they did not disclose the solution received from their contracts.
In a statement issued by the Agency in early November 2017, the SEC stated that celebrities should disclose any compensation they received for endorsing the token to avoid violating the anti-touting laws.
“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.”
Celebrities who promote the ICOs
In recent months many well-known celebrities have supported various ICOs. In September 2017, the undefeated boxing champion Floyd Mayweather promoted an ICO of Cryptocurrency credit startup Centra.
Meanwhile, actor Jamie Fox has approved the token sales of Cobinhood, which is advertised as a zero-fee virtual currency exchange. Hotel heiress and Reality Television (TV) star Paris Hilton has supported the ICO of a venture which is called as Lydian. In 2016, Hilton announced that she was engaged in a new millennium of technology, community, and social services.
The SEC advised that the potential investors should not base their decisions mainly on the endorsement of the celebrities. It claims that a promotional campaign may be part of a paid advertisement.