Consumer watchdog group Truth in Advertising says celebrities promoting non-fungible tokens (NFTs) on their social media channels is an area "rife with deception."
The not-for-profit consumer advocacy organization said on their website they investigated "celebrities who promote non-fungible tokens (NFTs) on their social media channels", finding that "it is an area rife with deception."
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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,
all of whom have been sent letters urging them to immediately disclose any material connections they have to NFT companies or brands they have promoted, stating:
"The promoter often fails to disclose a material connection to the endorsed NFT company." NFTs are digital certificates stored on the blockchain proving ownership of a digital or physical asset,
often an artwork, with many high-profile projects constantly attracting celebrity endorsement and promotion. While no real legal penalty has been attached,
TINA.org noted that it sent letters to the celebrities involved on Aug. 8 outlining their grievances and advising them of the potentially harmful effect shilling NFTs can have on the public.
One of the group's primary concerns outlined in the letters is that the possible financial risks associated with investing in such speculative digital assets are not being disclosed.
TINA.org previously sent letters to Justin Bieber and Reese Witherspoon's legal teams on June 10 for promoting NFTs 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 the actress is not receiving any material benefits from promoting NFTs.
In a blog post on their website, TINA.org wrote that the previously mentioned celebrities could be violating the Federal Trade Commission (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 brands they are endorsing and make the disclosures clear,
unambiguous, conspicuous, and within the endorsement. So far, there has not been a publicized case of celebrities facing legal penalties for shilling NFTs or crypto.
Though there are several ongoing class action suits, most famously against Elon Musk for his endorsement of Dogecoin and Mark Cuban for promoting Voyager crypto products.
A handful of other celebrities like Matt Damon caused a significant stir when he appeared in an ad promoting crypto products. The actor was relentlessly mocked and ridiculed for his involvement.
In 2017, the U.S. Securities and Exchange Commission (SEC) warned investors about celebrity-backed initial coin offerings in a post on their website.
"Investors should note that celebrity endorsements may appear unbiased, but instead may be part of a paid promotion."
"Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws."
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According to the SEC, celebrities and influencers using social media to encourage followers to purchase stocks or other investments could be unlawful, If they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly. - cointelegraph