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SEC Targets Celebrities For Promoting ICO’s
The Securities and Exchange Commission (SEC) — the branch of the US federal government tasked with regulating financial markets — issued a stern warning to celebrities about the potential criminal liabilities of promoting Initial Coin Offerings (ICO).
The warning comes on the heels of Paris Hilton tweeting about an ICO for Lydian Coin, whose sole value appears to be purchasing marketing services from an affiliated startup company.
“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 SEC said via a statement.
Hilton removed the tweet, but not before the startup company pocketed more than $10m from the ICO.
SEC Warnings Issued To The Public As Well
In addition to the liability warning issued to celebrities, the SEC also had a strong message for the general public. While ICO’s might represent a new frontier of the digital revolution, the fact remains that its mainstream adoption is now bringing scammers and others looking to make a quick buck out of the woodwork.
The agency strongly advised potential ICO investors to be wary of celebrity endorsements, and to only hand over their hard earned USD after a thorough vetting and review of the company running the offering.
“Never make an investment decision based solely on a celebrity endorsement, or other information you receive through social media,” the SEC guided. “It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment,” the SEC said.
Online Gaming ICO’s On The Rise
The gaming and online casino world has seen an explosion of the ICO phenomenon as well. Most notably Etherium, a decentralized coin that is being used for gaming transactions, recently ran a successful offering. There is no doubt that such offerings will continue for both small and large — as well as legitimate and illégitime — projects.
If those in the online casino community can take any message away from this SEC warning, it’s that as with all things, buyer beware.