Consumer watchdog group Truth in Advertising (TINA.org) has called out 19 celebrities for allegedly promoting non-functioning tokens (NFTs) without disclosing their connection to the projects.
The non-profit consumer advocacy group said on its website that it “surveyed celebrities promoting non-fungible tokens (NFTs) on their social media channels,” and found that “it’s an area full of deception.”
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 all received letters urging them to immediately remove any material connections they have with NFT firms. to announce. or brands they have promoted, stating:
“The promoter often does not disclose a material connection to the approved NFT firm.”
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 sanction has been imposed, TINA.org noted that it sent letters to the affected celebrities on Aug. 8 outlining their grievances and advising them of the potentially damaging effect shilling NFTs could 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 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 violations, but stating that the posts would be updated.
Witherspoon’s legal team contacted TINA.org on July 20, claiming that the actress receives no material benefits from promoting NFTs.
Shilling may violate FTC guidelines
In a blog post on their website, TINA.org wrote that the aforementioned celebrities may be violating Federal Trade Commission (FTC) rules regarding the use of endorsements and testimonials in advertising and influencer requirements.
The advocacy group links to the FTC website which explains that influencers must disclose all material connections to brands they endorse and make disclosures clear, unambiguous, conspicuous and within endorsement.
So far, there has been no publicly disclosed case of celebrities facing legal penalties for shilling NFTs or crypto.
Although there are several pending class action lawsuits, most notably against Elon Musk for his endorsement of Dogecoin, and Mark Cuban for promoting Voyager crypto products.
A handful of other celebrities such as Matt Damon caused 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 U.S. Securities and Exchange Commission (SEC) warned investors about celebrity-backed initial coins in a notice on their website.
“Investors should be aware that celebrity endorsements may appear unbiased, but may instead be part of a paid promotion.”
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“Celebrities who endorse an investment often do not have the expertise to ensure the investment is appropriate and in compliance 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 may be illegal if they fail to disclose, directly or indirectly, the nature, source and amount of the fees paid.