Consumer watchdog group Truth in Advertising (TINA.org) has called out 19 celebrities for allegedly promoting non-fungible tokens (NFTs) without disclosing their connection to the projects.
The nonprofit consumer advocacy organization said on its website that they investigated “celebrities promoting non-fungible tokens (NFTs) on their social media channels,” and found that “it’s an area riddled with scams.”
Among the star-studded list are sports stars Floyd Mayweather and Tom Brady, music icons Eminem and Snoop Dog, and several actresses, including Gwyneth Paltrow, who have been sent letters urging them to immediately disclose any material connections. they have with NFT companies. or brands that they have promoted, indicating:
“The promoter often fails to disclose the material connection to the supported NFT company.”
NFTs are digital certificates stored on the blockchain that prove ownership of a digital or physical asset, often a work of art, with many high-profile projects often attracting celebrity endorsement and promotion.
While no actual legal penalty has been imposed, TINA.org noted that it sent letters to the celebrities involved on August 8 outlining their complaints and advising them of the potentially damaging effect that shilling NFTs can have on the public.
One of the group’s main concerns outlined in the letters is that the potential financial risks associated with investing in such speculative digital assets are not disclosed.
TINA.org previously sent letters to the legal teams of Justin Bieber and Reese Witherspoon on June 10 for promoting NFT on their social media accounts without disclosing their connection to the projects.
Bieber’s legal team responded on July 1, denying any wrongdoing but stating the posts would be updated.
While Witherspoon’s legal team contacted TINA.org on July 20, claiming that the actress receives no material benefit from promoting NFT.
The Shilling May Violate FTC Guidelines
In a blog post on its website, TINA.org wrote that the celebrities mentioned above may be violating the Federal Trade Commission’s (FTC) rules regarding the use of endorsements and testimonials in advertising and the requirements for influencers.
The advocacy group links to the FTC website which outlines that influencers must disclose any material connections to the brands they endorse, and make disclosures clear, unequivocal, conspicuous, and within the endorsement.
So far, there has not been a publicized case of celebrities facing legal penalties for NFT shillings or cryptocurrencies.
Although there are several ongoing class action lawsuits, most famously against Elon Musk for his endorsement of Dogecoin and Mark Cuban for promoting Voyager’s crypto products.
A handful of other celebrities like Matt Damon caused quite a stir when he appeared in an ad promoting crypto products, in which the actor was relentlessly mocked and ridiculed for his involvement.
Don’t listen to celebrities: SEC
In 2017, the US Securities and Exchange Commission (SEC) warned investors about celebrity-backed initial coin offerings in a post on its website.
“Investors should keep in mind that celebrity endorsements may appear unbiased, but may instead be part of a paid promotion.”
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“Celebrities backing an investment are often not experienced enough to ensure the investment is appropriate and compliant with federal securities laws.”
According to the SEC, celebrities and influencers who use social media to encourage their followers to buy stocks or other investments could be illegal if they fail to disclose the nature, source and amount of any compensation paid, directly or indirectly.