Beware Paris Hilton's investment advice, SEC tells investors
Celebrity cryptocurrency endorsements labelled 'potentially unlawful promotion'
The United States' Securities and Exchange Commission (SEC) has warned investors that celebrities may not understand that their endorsements of initial coin offerings are in breach of the law.
The financial watchdog has issued advice in which it warns that “Investors should note that celebrity endorsements may appear unbiased, but instead may be part of a paid promotion.”
The SEC worries that celebrities may not have read its previous advice that initial coin offerings may be cons, and/or so conceptually close to conventional securities that endorsements need to be carefully-framed to stay on the right side of the law.
“Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws,” the statement says. Those laws, the SEC explains, mean “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.”
Celebs keen on cryptocurrency include Paris Hilton, who signed up for an ICO but insisted “#ThisIsNotAnAd”, and boxer Floyd Mayweather.
“We encourage investors to research potential investments rather than rely on paid endorsements from artists, sports figures, or other icons,” the SEC advises. And if that's news to you, perhaps not investing in anything is the best course of action. ®