19 celebrities called out by consumer watchdog group for shilling NFTs
Consumer watchdog group Truth in Advertising (TINA.org) has called out 19 celebrities for allegedly promoting non-fungible tokens (NFTs) without disclosing their affiliation with the projects.
The consumer nonprofit said on its website that it investigated “celebrities promoting non-fungible tokens (NFTs) on their social media channels” and found that “it’s an area filled with 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 been sent letters urging them to immediately disclose any material connections they have to NFT companies. or brands they have promoted, saying:
“The promoter often fails to disclose material affiliation with the approved NFT company.”
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.
Although no real legal penalty has been attached, TINA.org noted that they sent letters to the celebrities involved on August 8 outlining their grievances and informing 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 team on June 10 for promoting NFTs on their social media accounts without disclosing their affiliation with the projects.
Bieber’s legal team responded on July 1, denying any wrongdoing, but said the posts would be updated.
While 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 the requirements for influencers.
The advocacy group links to the FTC website which outlines that influencers must disclose all material connections to brands they endorse 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 NFT or crypto.
Although there are several ongoing 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 attracted considerable attention when he appeared in an ad promoting crypto products, which saw the actor mercilessly mocked and ridiculed for his involvement.
Don’t listen to celebrities: SEC
In 2017, the US Securities and Exchange Commission (SEC) warned investors about celebrity-backed initial coin offerings in a post on its website.
“Investors should note that celebrity endorsements may appear unbiased but may instead be part of a paid promotion.”
Related: Snoop Dogg may be the face of Web3 and NFTs, but what does that mean for the industry?
“Celebrities endorsing an investment often do not have sufficient expertise to ensure that the investment is appropriate and compliant 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 the nature, source and amount of compensation paid, directly or indirectly.
