The U.S. Securities and Exchange Commission (SEC) has issued a warning to investors regarding celebrity-endorsed initial coin offerings (ICOs).
The SEC , which released a wide-ranging statement on the blockchain use case stated that celebrities who endorse token sales may run improperly of “anti-touting” laws if they don’t correctly state what compensation, if any, they may have received.
The agency also stated that: “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.”
In recent months, celebrities such as actors Jamie Foxx and William Shatner, boxing champion Floyd Mayweather and hotel heiress Paris Hilton, among others, have publicly endorsed several projects ahead of their respective token sales.
The SEC also warned potential investors to not base their decisions solely on the endorsement of a celebrity.
Furthermore, the agency noted: “Investors should note that celebrity endorsements may appear unbiased, but instead may be part of a paid promotion. Investment decisions should not be based solely on an endorsement by a promoter or other individual”.