The United States Federal Trade Commission (FTC) has begun a probe on a number of crypto firms on the matter of possible ad misconduct for public materials which may have misrepresented facts and claims about cryptocurrencies and digital assets.
According to a report from Bloomberg, FTC spokeswoman Juliana Gruenwald has disclosed that the financial regulator has indeed begun an investigation that involves several crypto firms “for possible misconduct concerning digital assets.”
No further detail has been provided by the spokesperson, and no specific crypto firm has been named as a subject of the investigation. It is likely, though, that the investigations have been spurred by the recent controversies and current legal proceedings being done towards FTX, a now-bankrupt crypto exchange which has been mired with internal conflicts for its management, as well as being the subject of regulatory difficulties for failing to disclose full details of its operations.
Recent misleading advertising materials and paid promotions in the crypto space have been the subject of crypto investor backlash, and of course the prying eye of U.S. financial regulators such as the FTC.
Most recently, Kim Kardashian, a celebrity entrepreneur, was served with a fine by the U.S. Securities and Exchange Commission over her actions on social media promoting EthereumMax ($EMAX), a crypto token project. Kardashian, an influencer, was paid to promote the token, but she failed to disclose such a transaction. A similar vein of investigation was also began by the FTC concerning two athletes, NFL star Tom Brady and NBA great Stephen Curry. This is in relation to their involvement with the promotion of FTX in 2022.
The FTC is not alone in this initiative, though, as it has been reported by CryptoDaily. In mid-2021, the U.K. Advertising Standards Authority flagged crypto ads, and later issued an enforcement notice to at least 50 firms advertising crypto or working alongside crypto firms as agencies to produce advertising materials. A similar initiative was also done by Truth in Advertising, a U.S.-based consumer rights group which called out celebrities such as Floyd Mayweather, rappers Eminem and Snoop Dogg.
These probes and the intent they are pushed forward from are nothing new, with financial regulators now wary in the aftermath of 2018’s ICO scam wave. The SEC, in particular, even issued a notice dating back to 2017, in which it warned the public of celebrity investments, crypto or otherwise.
“Investors should note that celebrity endorsements may appear unbiased, but instead may be part of a paid promotion. Investment decisions should not be based solely on an endorsement by a promoter or other individual,” the SEC said.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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