- The watchdog group investigates celebrities who promoted NFTs on social media
- TINA.org wrote that the celebrities violated the Federal Trade Commission rules
- The celebrities should disclose the nature, source and amount of any compensation paid
Truth in Advertising (TINA.org) summons 19 celebrities for allegedly promoting NFTs without disclosing their part in the projects.
The consumer watchdog group claims the investigated celebrities promoted NFTs on their social media platforms. The non-for-profit consumer advocacy organization finds it an area rife with deception.
The celebrities shilling NFTs
Among the celebrities in question include sports stars Floyd Mayweather and Tom Brady. Music icons Eminem and Snoop Dogg appeared on the list as well. Several actresses including Groyneth Paltrow of whom received letters.
The letters urged the celebrities to immediately disclose any material connections they have and the information to NFT companies or brands they promote.
TINA.org claims that promoters often fail to disclose material connections to the endorsed NFT company. However, many high-profile projects often seem to attract celebrity endorsement and promotion.
TINA.org only outlined their grievances and advised them on the potentially harmful effects of shilling NFTs. The consumer watchdog seriously believes that shilling NFTs poses a threat to the public.
A key issue pointed out is that financial risks associated with investing in NFTs remain undisclosed.
Celebrities versus TINA.org
Previously, TINA.org sent letters to Justin Beiber and Reese Witherspoon’s legal teams. This took place on June 10 after the celebrities promoted NFTs on social media platforms.
Despite the call out, the celebrities failed to disclose their connection to the projects.
On July 1, Justin Beiber’s team responded by denying any wrongdoing. Subsequently, Beiber stated that the posts would be updated.
Meanwhile, Witherspoon’s legal team contacted TINA.org on July 20. Her legal team claimed that the actress never received any material benefits from NFT promotions.
In a blog post, TINA.org wrote that the celebrities violated the Federal Trade Commission rules and that they also infringed on the rule of attaining certain requirements for influencers.
So far, no cases of celebrities facing legal penalties for shilling NFTs or crypto comes to light. However, several ongoing class actions continue to spur the crypto world.
The most famously known lawsuit targeted Elon Musk for promoting Dogecoin. Mark Cuban also faces a lawsuit for promoting Voyager crypto products. Other celebrities like Matt Damon also caused a significant stir. The celebrity appeared in an ad promoting crypto products which later led to the actor suffering relentless mockery and ridicule for his involvement.
SEC Speaks on NFTs
In 2017, the United States Securities and Exchange Commission (SEC) issued a warning to investors on its site. The regulatory body warned investors against celebrity-backed initial coin offerings.
SEC believes that celebrity endorsements may appear unbiased, though this may fall under the paid promotion category. Not forgetting celebrities who endorse an investment often lack sufficient expertise.
They do not ensure that the investment is appropriate and in compliance with federal securities laws.
In addition, celebrities using social media platforms to market NFTs without disclosing their nature of involvement seems unlawful. They should disclose the nature, source and amount of any compensation paid, directly or indirectly.
