Celebrity Endorsements of ICOs Backfire

As cryptocurrencies have continued to soar in popularity year on year, more public figures are joining the ranks of cryptocurrency fans.

This has been great news for ICOs, as the companies behind the cryptocurrency ventures are all hungry for funding to launch their products.

Celebrities of all kinds have been lining up to endorse various new ICOs they believe in. And the list is long indeed.

Hilton heiress Paris Hilton has endorsed an ICO. Last year, she jumped on Twitter to talk up LydianCoin.

The business behind LydianCoin describes it as “the world’s first A.I. big data marketing cloud’. Tokens bought from the company will be redeemable for advertising campaigns.

Actor and singer Jamie Foxx has been promoting a token by the name of Cobinhood, and music producer DJ Khaled is associated with something called Centra.

Floyd “Crypto” Mayweather

Boxing superstar Floyd Mayweather has been one of the more prominent celebrities endorsing various ICOs.

In addition to Centra, he has also endorsed the Stox.com ICO, and has posted a picture of himself on Instagram to promote it.

Stox has also been endorsed by soccer player Luis Suarez, and the company has so far managed to raised $30 million.

The company has promised its customers that their tokens can be redeemed for online services relating to betting and the stock market.

Many have labeled these claims dubious. Mayweather, however, is a firm believer. And his endorsements did not stop at Stox.

He later branded himself Floyd “Crypto” Mayweather on Twitter, in an endorsement of another ICO created by a company called Hubii Networks.

Hubii Networks is planning on launching a blockchain technology, and has so far raised $6.7 million worth of Ethereum units.

The fun, however, is about to stop.

The main concern about ICOs

The Securities and Exchange Commission (SEC) has in the past made a statement warning against buying into celebrity endorsements:

“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.”

The issue with many of these ICOs is that they are considered to be securities, and that is where the regulators step in.

As the “coins” being sold are not actually legal tender, they are to be considered investments in specific products or services.

The main worry regarding these celebrity endorsements, and the people who are enticed into investing in the ICOs, is that the companies behind them might be misleading the public.

Misleading buyers of securities are against the law, according to

Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of the Securities Exchange Act,

81% of all ICOs launched from early 2017 to now has been identified as scams by the research group Satis, which advises ICOs.

The regulators step in

If the public is indeed being misled, then the celebrities endorsing the ICOs could potentially be implicated and face legal consequences.

Centra, which was endorsed by Mayweather and DJ Khaled (among many others), has now been charged by the SEC with fraud to the tune of $32 million.

Many experts believe that any celebrities associated with Centra could now be implicated and face charges as well.

Could this spell the end of celebrity-endorsed ICOs? And what do you think about the many ICO scams in general? Will they be weeded out the moment regulators like the SEC step in?

Leave your opinion in the comment section below!

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