Between hype and fraud: stars punished for crypto-money advertising

economy

Friday, November 30, 2018

The cryptographic currencies of 2017 have been announced, but not everyone who has joined the hype has been rich. There were dubious shops – and celebrities became part of it. Now, two of them are held responsible.

The US Securities and Exchange Commission has for the first time sanctioned celebrities for ads paid unfairly for suspicious transactions in cryptocurrency. Professional boxer Floyd Mayweather and hip-hop star DJ Khaled have agreed to a fine of $ 300,000 and $ 100,000, the agency said. In addition, to pay $ 300,000 or $ 50,000 to Mayweather and Khaled, according to the SEC, these amounts would have introduced promotional actions for cryptographic coins.

Both announced their initial social offers via their social media, without revealing that they were paid for these offers. ICOs are so-called digital IPOs. Start-ups can use it to raise funds from investors for projects by issuing and auctioning cryptographic credits (coins). However, this largely unregulated form of borrowing has long been the subject of much controversy and has often been used by US supervisory authorities for fraud purposes.

Even with the so-called Centra ICO, which Mayweather and Khaled had boasted, the SEC was not right. The agency sued the three project managers in April for securities fraud. They would have simulated 32 million dollars in the capital market with false promises. "Investors need to be skeptical about publishing investment advice on social media platforms and not about making decisions based on celebrity recommendations," SEC co-director Steven Peikin warned. "Social media influencers" are often paid promoters, not finance professionals.

Fueled by the hype surrounding bitcoins – the best-known speculative object among cryptographic currencies – the digital currency market was invaded in 2017 and ICOs were also very much in vogue. Meanwhile, the hype is over and many investors who arrived too late have suffered heavy losses. Since the end of 2017, the price of bitcoin has risen from a record high of about 20,000 to less than $ 4,000. ICOs are now considered poorly seen in the financial markets. Most of the many small digital currencies, besides the best-known heavyweights such as Bitcoin, Ether or XRP, have an even more miserable existence. Many of them are even now despisedly called "shitcoins" in the scene itself.

Source: n-tv.de