Image source: Empire Weekly
Since non-fungible tokens (NFTs) started gaining prominence in early 2021, celebrities have started to join the trend, often making substantial purchases.
However, people involved in NFTs have recently been called out for Schilling NFTs.
Consumer advocacy group Truth in Advertising, or TINA.org, recently called out more than 19 celebrities.
The group claimed that the celebrities were promoting NFTs without disclosing their ties to the project.
Truth in Advertising, a non-profit organization, posted on its website that it was investigating “celebrities who promoted non-fungible tokens (NFTs) on their social media channels,” and found that “it is an area rife with deception.”
With a number of celebrities associated with NFTs, Truth in Advertising focused on a small group of big names.
Among those named are athletes Floyd Mayweather and Tom Brady, rappers Eminem and Snoop Dogg, and actresses like Gwyneth Paltrow.
Letters were sent to all celebrities urging them to immediately disclose the material connections they hold to the NFT companies and brands they sponsor.
“The promoter often fails to disclose material connection to the endorsed NFT company,” explained Truth in Advertising.
Although there was no real legal penalty involved, the group noted that they had sent out the letters on August 8 setting out their grievances and informing them of the potentially harmful effects Schilling NFTs can have on people.
Truth in Advertising said it is concerned about the potential financial risks involved in investing in speculative digital assets that are not disclosed.
The organization sent letters to the legal teams of Justin Bieber and Reese Witherspoon on June 10, writing to them about their NFT promotion on social media accounts, without disclosing their connection to the projects. Eventually both teams responded.
Bieber’s legal team responded on July 1, denying any wrongdoing and saying they would update the posts.
Witherspoon’s legal team responded 19 days later, explaining that he does not receive any material benefit for promotions.
Violations of the FTC Directive
The organization also posted a blog post on its website indicating that celebrities may violate Federal Trade Commission or FTC rules regarding the use of endorsements and testimonials in advertisements.
The group links to the FTC website, which states that influencers must disclose material links to the brands they endorse.
The action involves transparency, therefore the populars are clear, unequivocal, evident and are within approval.
Starting now, there have been no advertised cases of celebrities who deal with legal sanctions for the NFT scer.
However, there have been a handful of class action causes regarding cryptocurrencies.
The most remarkable accident is the approval of Elon Musk’s Dogecoin and the promotion of Mark Cuban’s Voyager Crypto product.
In the meantime, celebrities like Matt Damon made the waves when he appeared in an advertisement that promoted cryptographic products.
The cameo led Damon to be mocked and ridiculed for his involvement.
More than five years ago, the US Securities and Exchange Commission or SEC warned investors about the initial celebrity-sponsored coin offerings.
“Investors should note that celebrity endorsement may appear unbiased, but instead may be part of a paid promotion,” the SEC post wrote on their website.
“Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws.”
The SEC said celebrities and influencers encouraging their followers to buy stock or invest in investments could be illegal, especially if they don’t disclose the nature, source, and amount of compensation paid.