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SEC Weighs in on ICO Endorsements
Traders Magazine Online News, November 9, 2017
Celebrity product endorsements are a huge business in consumer staples but might not find a home in the financial markets – especially the nascent cyber currency business.
According to a recent report on Reuters, the US Securities and Exchange Commission has begun to look at the recent spate of celebrity endorsements for Initial Coin Offerings (ICOs) and if they are OK. Some ICOs have tapped celebrities as endorsers of these currencies and the SEC said these affirmations may be unlawful if the coins are considered securities and the celebrities do not “disclose the nature, scope, and amount of compensation received in exchange for the promotion.”
“A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws,” the SEC’s Enforcement Division and Office of Compliance Inspections and Examinations said in a joint statement.
In looking further at the statement, Reuters noted that promoters may also be liable for possible violations of anti-fraud rules and for acting as unregistered brokers, the statement added.
“The SEC will continue to focus on these types of promotions to protect investors and to ensure compliance with the securities laws,” the SEC said.
ICOs have raised $2.2 billion from January to September, according to data provider Novum Insights, Reuters quoted.
Both the SEC and Financial Conduct Authority have previous issued statements warning investors about the dangers surrounding ICOs.
See related stories:
FCA Publishes ICO Primer and Investor Warning
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