- NPO is investigating celebrities who promote NFTs on their social media, "area rife with deception"
- Tom Brady, Floyd Mayweather, Paris Hilton, Snoop Dogg, and Reese Witherspoon have been asked for disclosure
- The FTC instructs influencers to reveal any material connections to companies they are endorsing
Truth in Advertising (TIA), a consumer watchdog group, has called out Eminem, Justin Bieber, Gwyneth Paltrow, and 16 other celebrities for promoting NFTs without disclosing their connection to the projects, CoinTelegraph wrote.
The NPO posted on their website that they were investigating celebrities who promoted NFTs on their social media, adding it was “an area rife with deception.”
Celebs asked to disclose material connections
Other celebrities asked to disclose their material connections to NFT brands and companies they have promoted include Tom Brady, Floyd Mayweather, Paris Hilton, Snoop Dogg, and Reese Witherspoon.
They all received letters from TIA with urgent warnings to this end. TIA shared its grievances and advised them of the potentially damaging effect their promotion can have on the public. One of their main concerns is the financial risk of these speculative investments, which they say is not being disclosed.
Celebs deny material benefit
On June 10, TIA sent letters to Justin Bieber and Reese Witherspoon’s legal teams. The latter responded to TIA on July 20, insisting Witherspoon’s not gaining anything from promoting NFTs. Bieber’s legal team also denied wrongdoing but assured the posts would be updated.
Violation of FTC rules still possible
TIA also posted that the celebrities might be violating the Federal Trade Commission (FTC) guidelines regarding influencer requirements and the Use of Endorsements and Testimonials in Advertising. The FTC instructs influencers to reveal any material connections to companies they are endorsing and make the connections conspicuous and clear within the endorsement itself.
Precedents in the industry
Celebrities have never faced legal penalties for promoting crypto or NFTs so far, but a few class action suits are ongoing. These are against Elon Musk for promoting Dogecoin and Mark Cuban for endorsing Voyager crypto products.
Actor Matt Damon caused controversy when he promoted crypto products. His involvement brought him relentless ridicule and mockery.
SEC: Don’t listen to influencers
The US Securities and Exchange Commission (SEC) published a warning about celebrity-backed initial coin offerings on its website back in 2017. They wrote:
Investors should be aware that celebrity endorsements may look objective but be part of a paid promotion. Celebrities who encourage an investment rarely have enough expertise to ensure that the investment is appropriate and in compliance with federal securities laws.
The SEC finds that influencers and celebrities using social media to convince followers to make any investments could be illegal unless they reveal the source, nature, and amount of direct or indirect compensation.
