Why are celebrities in trouble for crypto certifications and what is India’s stance on the matter?

Why are so many celebrities suddenly in trouble for crypto endorsements and what is India’s stance on the matter? Read here –

Cryptocurrencies have glorified themselves generously in the past few years. Major Hollywood celebrities, athletes and some of the biggest names in television have often used social media, music videos and even interviews to promote virtual digital assets. However, several of these celebrities have suddenly found themselves under the scanner of the law in recent months.

Most notably, Kim Kardashian and Floyd Mayweather won class action lawsuits for promoting the EthereumMax (EMAX) cryptocurrency. Recently, Justin Bieber, The Weekend, Post Malone, Madonna and several other celebrities were named in a class action lawsuit against NFTs creator Bored Ape Yacht Club (BAYC).

Why are so many celebrities suddenly in trouble for crypto endorsements and what is India’s stance on the matter? Bookmark to find out.

Celebrities and cryptocurrency endorsements

In January of this year, the United States Securities and Exchange Commission (SEC) fined Kim Kardashian for her alleged involvement in a cryptocurrency ‘pump and dump’ scheme. Kim has been fined $1.26 million for failing to disclose to her huge social media fan base that she was paid solidly to promote the EthereumMax (EMAX) crypto project.

The EMAX project has since faltered, and the investors who invested in the project have been left without a bag. This is how the pumping and discharging scheme works. The project is promoted through well-known celebrities, which is why people rush to invest in that project. These investments raise the price of the cryptocurrency. But suddenly, those who planned the scheme sell off their stake, take the money and disappear.

Arriving in a suit with Justin Bieber and co. BAYC’s creators are said to have recruited celebrities to “artificially” inflate the value of its NFTs, resulting in “staggering losses” for customers. In addition to Justin Bieber, the lawsuit names Serena Williams, Stephen Curry, Snoop Dogg, Future, Diplo, Gwyneth Paltrow, Kevin Hart and others as defendants.

Several names also appeared in the class action lawsuit against FTX. These names include Shaquille O’Neal, Gisele Bundchen, Naomi Osaka, Stephen Curry, Larry David and Tom Brady, all of whom have appeared in FTX commercials. In one of those ads, Steph Curry, a prominent NBA player, denies being a crypto expert, but states that since he’s pro-FTX, there’s nothing to worry about. We all know how things turned out there.

But why are celebrities pulling back on their support for cryptocurrencies?

In the Kim Kardashian case, the SEC alleged that she violated the anti-advertising provision of the Securities Act; failed to disclose that she had received a payment ($250,000) in exchange for promoting Ethereum Max, which was an unregistered security.

But that’s how ads work, right? Celebrities get paid big bucks to promote products and services, so why are they being pulled for their crypto endorsements? Well, the big difference here is the product. In the US, Ethereum Max and other crypto assets are investment opportunities under the watchful eye of the SEC. According to SEC regulations, Kardashian should have disclosed that EthereumMax paid her $250,000 to “advertise” the token, which she did not.

In the BAYC case, the investors alleged that the named celebrities violated securities law and induced their investments through misrepresentations and omissions.

“Fictitious celebrity endorsements and misleading promotions related to the launch of the entire BAYC ecosystem (the so-called Otherside metaverse) succeeded in artificially increasing the interest and price of BAYC NFTs during the Relevant Period, causing investors to purchase these losing investments at drastically inflated prices,” it said. lawsuits. The case with the FTX lawsuit is similar.

India’s stance on celebrity endorsement of cryptocurrencies

India has been skeptical of cryptocurrencies from the beginning. The government closely monitors the area and takes several steps to arrange it. The country has a large population, of which more than 50 percent are under the age of 25. The youth in India are very impressionable and Bollywood has quite an influence on these young minds.

Last year, when the crypto market was booming, many crypto exchanges in India approached Bollywood celebrities to endorse their brand. Popular Indian crypto exchanges like CoinDCX, CoinSwitch Kuber, Bitbns etc. have approached Bollywood actors like Ayushmann Khurrana, Ranveer Singh, Disha Patani, Anupam Kher etc. to promote their platforms on national television and social media.

However, the Advertising Standards Council of India (ASCI), a self-regulatory organization established in 1985, has revealed that investors are comparing returns on gold with those on cryptocurrencies. Therefore, in May 2022, the capital markets regulator, the Securities and Exchange Board of India (SEBI), proposed a ban on the promotion of cryptocurrencies by Indian celebrities.

“Since crypto products are unregulated, prominent public figures including celebrities, athletes etc. or their voice will not be used to endorse/promote crypto products,” SEBI reportedly said in a statement.

The market regulator also suggested adding the following disclaimer to crypto ads: “Operating crypto products may lead to prosecution for possible violation of Indian laws such as FEMA, BUDS Act, PMLA, etc.”

Conclusion

Celebrities, like all other citizens, have moral responsibilities towards society. Even more so because of the love and support they get from fans and the community. It ensures them that additional position in society. Many people are influenced by them, some imitate them and absorb their qualities.

Therefore, if celebrities endorse a crypto service or product, it is important to highlight the financial risks that come with the asset. Otherwise, it may mislead the public and be punishable by law.

Leave a Comment

Your email address will not be published. Required fields are marked *