The Securities and Exchange Commission or the SEC has spoken about the recent trend where celebrities are endorsing new virtual currencies. The Commission warned these celebrities and others wishing to do so by telling them that they are breaking the law. In the recent few weeks, there has been a trend referred to as initial coin offering or ICO involving digital currencies. This is a hot method that is being used to raise money for technology projects where entrepreneurs buy some shares in the virtual currency company in the hope that they will rise in the coming months. While this trend remains unregulated, the initial virtual currency companies have recorded significant success with Bitcoin being an example. The SEC estimates that close to $3 billion has been raised in 2017 alone through the initial coin offerings. This arises from the 270 projects relating to the virtual currencies that have been announced in 2017. This business, on the other hand, has attracted celebrities and big names from Hollywood. The rapper the Game is one of these stars, and he is joined by socialite Paris Hilton. To promote these projects, these celebrities receive some payments. The announcement by the SEC cited a number of violations for the celebrities who supported the initial coin offering.
This includes what they referred to as an antifraud regulation and breaking the rules that guide brokers who deal with investments. To ensure that the celebrities were aware of how serious the SEC was, it issued a warning saying that it would focus on these promotions. The SEC said that this was necessary if it was to ensure that laws are followed, and investors are protected. This warning comes after the fraud relating to these virtual currency companies and celebrities was highlighted by the New York Times in an article. The article revolved around a troubled company known as Centra. The celebrities promoting the company were rapper DJ Khaled and Floyd Mayweather. While the company was able to raise over $30 million, it has become apparent that the project leaders misled the investors on key issues such as whether the project would be issuing debit cards. Four months ago, the SEC released a statement warning the investors specializing with ICO telling them that they are breaking securities laws. However, it’s worth noting that the statement that was released yesterday focused on the people promoting the coins. The statement told investors that these celebrities didn’t tell them that they were paid to promote.