In a warning issued by US regulator Securities Exchange Commission (SEC) to investors about celebrity endorsed initial coin offerings (ICOs). SEC in its release said that celebrity-endorsed ICOs may run afoul of “anti-touting” laws if they don’t correctly mention the compensation details, if any, they may have received.
The statement reads: “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.”
The release comes after many such incidents in which the regulator has observed celebrities endorsing several projects ahead of their respective token sales. This might affect the investor’s decision and judgment while considering investing in any of the such ICOs.
The agency said:”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.”
As cryptocurrencies and ICO are decentralized and are not regulated by any agency, any loss in investment due to scams or unable to meet the objectives of ICO, cannot be tried by any agency or court. So, investors in cryptocurrency are ICOs are advised to maintain caution on their investments.