Legal Tip: If you get paid to promote something on social media, you MUST disclose this arrangement within the post. An #ad, #sponsored or #paid hashtag will usually suffice. The rule applies for diet teas and cryptocurrencies alike.
SEC Crypto Marketing Case: Mayweather and Khaled
Pro boxer Floyd “You can call me Floyd Crypto” Mayweather and musician DJ Khaled recently learned an important SEC crypto marketing lesson.
The pair had spent several months hyping various initial coin offerings online, but both celebrities failed to disclose that the company paid them to do so. According to reports, Mayweather pocketed a $100,000 fee from Centra Tech Inc; Khaled got $50,000.
This SEC crypto marketing case, however, won’t grace a courtroom anytime soon. They have already agreed to an SEC settlement that includes a no-fault clause. For its part, the SEC vowed to continue investigating ICO fraud, from both financial regulatory and marketing angles.
Famously, the boxer-turned-promoter once boasted on social media to call him “Floyd ‘Crypto’ Mayweather from now on.” But ultimately, Mayweather and Khaled will have to fork over about 150% of their crypto-promotional profits for failure to disclose. They also agreed not to promote securities for a few years.
SEC Crypto Marketing: The SEC and IRS Are Thirsty For Fraudulent ICO Blood
Yes, government officials see the potential for blockchain technology and cryptocurrencies. However, they’re not exactly taking a libertarian approach to the market.
Both the IRS and SEC have made it crystal clear that certain types of ICOs MUST follow the same regulations as traditional offerings. Additionally, all crypto-based businesses are bound to all promotional guidelines set out by the FTC, SEC, IRS, and in many cases, international bodies.
Connect With An ICO Lawyer Who Handles SEC Crypto Marketing Cases
Interested in executing a compliant initial coin offering? Whether you’re contemplating a play or ready to launch, it’s wise to consult with an attorney. Our crypto legal team has already saved startups millions in potential non-compliance fees — simply by looking over their plans and pointing out how to plug a few potential regulatory holes.
We also provide extensive tax positioning advice for crypto and blockchain businesses. We asses the details of your exact situation and offer custom-fit recommendations.
Get in touch today to begin the conversation.