Celebrities & Virtual Currencies

Celebrity endorsements normally raise a variety of legal issues - generally these kinds of 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 has taken notice of the celebrity attention and endorsements that are popping up for different virtual currencies- the SEC has taken the position that "virtual tokens or coins sold in ICOs may be securities, and those who offer and sell securities in the United States must comply with the federal securities laws.

Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion. A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws. Persons making these endorsements may also be liable for potential violations of the anti-fraud provisions of the federal securities laws, for participating in an unregistered offer and sale of securities, and for acting as unregistered brokers.

The SEC has stated that it intends to continue to focus on these types of promotions to protect investors and to ensure compliance with the securities laws.