The Securities and Exchange Commission (SEC) of the United States, is coming down hard on cryptocurrency tokens sales with an insider stating several months back that the SEC was working on a lot of cases related to ICO projects including that of social media influencers.
Late last month, it was reported that the SEC charged former boxer, Floyd Mayweather and music artiste, DJ Khaled with the promotion of ICOs illegally. They were fined and have settled with the SEC based on these charges. Although it seems their troubles are far from over as both personalities were named in a lawsuit over an ICO they promoted which has been deemed a fraud by a judge.
The probes by the SEC on social media influencers who promote ICOs might not just end with these two. If evidence comes to light about cryptocurrency review platforms, writers and celebrities receiving payments to promote ICOs and not revealing to the public the reimbursement received and the amount thereof, there could be serious crackdowns in the media space by the SEC. The SEC stated last year that;
“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.”
The SEC also made a statement a few days ago to buttress their earlier declaration last year explaining to potential investors to be wary of celebrities promoting coins and tokens. They indicated that social media influencers knew nothing of financial investments and the promotions they made about securities either on the blockchain or in the traditional financial world were paid for. They said that the securities promoted could end up as frauds and have investors lose their hard-earned money while believing the words of these celebrities. The SEC further indicated that any influencer promoting ICOs labeled as securities by the SEC after receiving payment would have engaged in a violation of the regulation by the SEC.
Coinbase, the platform with the highest volume of fiat to crypto conversions in the U.S. has been working with regulators in listing cryptocurrencies on its exchange. Earlier this year in May, the large exchange stated that they were expected to list Stellar (XLM), Cardano (ADA), 0x (ZRX), Zcash (ZEC), and Basic Attention Token (BAT). It’s less than one month to the end of the year, and only three of the above five cryptocurrencies have been listed.
It has been reported that Coinbase has been wary of the cryptocurrencies it has been listing, making sure that the cryptocurrencies listed are not recognized as securities by the SEC. A situation where Coinbase lists an altcoin deemed as security could lead to prosecution for the exchange. A credible news website, however, reported that Jay Clayton, the chairman of the SEC said that most ICOs are viewed by the SEC as securities and Bitcoin wasn’t listed as a security to them.
Floyd Mayweather paid a fine in the range of $600,000 after receiving half that price to promote just three token sales. This was as a result of breaking the SEC rule which states that an influencer must reveal to his/her audience the amount received to the target audience. The SEC had earlier noted that the fine paid could be twice the amount collected to promote the ICO.