Consumer watchdog group Truth in Advertising (TINA.org) celebrities promoting non-fungible tokens (NFTs) on their social media channels is an area “rife with deception.” They have called out 19 celebrities for allegedly promoting non-fungible tokens (NFTs) without disclosing their connection to the projects.
The star-studded list includes sports stars Floyd Mayweather and Tom Brady, music icons Eminem and Snoop Dog, and several actresses, including Gwyneth Paltrow. All of them have been sent letters commanding them to 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.”
Though no real legal penalty has been committed, TINA.org distinguished that it sent letters to the celebrities involved on Aug. 8 asking about their grievances and advising them of the harmful effect shilling NFTs can have on the public.
The group’s primary concern is that the possible financial risks related to investing in such speculative digital assets are not being revealed.
TINA.org formerly 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.
Though Bieber’s legal team denied any wrongdoing and stated that the posts would be updated on July 1. Similarly, Witherspoon’s legal team wrote TINA.org on July 20, claiming the actress is not receiving any material benefits from endorsing NFTs.
TINA.org wrote in a blog post on their website, that the above-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 backing group links to the FTC website which outlines that influencers must reveal any material connections to brands they are approving, and make the disclosures clear, definite, exposed, and within the endorsement.
So far, there has not been a revealed case of celebrities facing legal penalties for shilling NFTs or crypto.
However, there are numerous ongoing class action suits, against Elon Musk for his endorsement of Dogecoin, and Mark Cuban for endorsing Voyager crypto products.
A minority of other celebrities like Matt Damon caused an important stir when he looked in an ad promoting crypto products. The actor was persistently mocked and derided 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.
According to the SEC, celebrities and influencers using social media to influence their followers to purchase stocks or other investments could be illegal if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly
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