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fc178 Celebrity Crypto-Hawkers Should Get a Close Look
Remember when the actor Matt Damon pontificated about how “fortune favors the brave” people who invest with Crypto.com? Or when the director Spike Lee applauded the digital rebellion championed by Coin Cloud? Since the spectacular collapse of the cryptocurrency exchange FTX, Mr. Damonfc178, Mr. Lee and most other crypto-touting celebrities have largely gone silent — and for good reason.
There was little precedent for the scale and the star power that characterized the deluge of high-profile celebrity endorsements promoting cryptocurrencies. And now crypto values and crypto firms are going bust, leading investors’ savings to tank, too.
As the former chief of the Securities and Exchange Commission’s Office of Internet Enforcement, I believe regulators have some of these celebrity endorsers squarely in their sights and, when appropriate, will pursue them aggressively. Buying a bottle of Gatorade or a Rolex watch shilled by a celebrity probably never put someone’s life savings at risk. But buying into an endorsement of crypto certainly did, and these endorsers’ actions warrant intense scrutiny in the least.
Given the growing crypto-related investor carnage, the S.E.C. and the Department of Justice may step up their efforts. The S.E.C. has already been quite aggressive in its crypto-related enforcement program, filing over 100 enforcement actions and winning all the ones I have reviewed. Both the S.E.C. and the Justice Department have also created special crypto units, each eager to hit the ground running.
Moreover, the timing was not good. Many celebrities touted the life-changing power of crypto investing just as the speculative mania was nearing its peak.
In its recent action against FTX’s founder, Sam Bankman-Fried, the S.E.C. claimed that FTX had co-opted celebrities to promote its brand as a “trustworthy company,” citing Tom Brady, Gisele Bündchen, Stephen Curry, Major League Baseball and the Miami Heat basketball team in investment materials shown to at least one investor. The language suggests that the S.E.C. considers FTX’s use of celebrities to have served as a critical aspect of Mr. Bankman-Fried’s alleged scheme and will most likely investigate the nature of FTX’s celebrity agreements and joint efforts.
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