The U.S. Federal Trade Commission (FTC) is investigating several unnamed crypto firms over deceptive or misleading crypto advertising, according to a Bloomberg report.
“We are investigating several firms for possible misconduct concerning digital assets,” the FTC spokeswoman Juliana Gruenwald Henderson said in a statement.
Henderson declined to share further information about which firms are the subject of the probe or what had prompted the Commission to launch investigations.
Roughly 70% of $1 Billion Lost to Crypto Scammers Since 2021 Was Bitcoin: FTC
More than 46,000 individuals have lost over a combined $1 billion in crypto-related scams since the beginning of last year, according to the Federal Trade Commission. Approximately $680 million in fraud was reported in 2021, and some $329 million was reported just in the first quarter of 2022, according to a report released Friday. Social media usage while holding crypto creates "a combustible combination for fraud," the FTC wrote. "Nearly half the people who reported losing crypto to a scam sin...
According to the FTC’s website, “when consumers see or hear an advertisement, whether it’s on the Internet, radio or television, or anywhere else, federal law says that ad must be truthful, not misleading, and, when appropriate, backed by scientific evidence.”
Additionally, the agency enforces laws that require truth in advertising, including rules that individuals disclose when they have been paid for endorsements or reviews.
"While we can’t comment on current events in the crypto markets or the details of any ongoing investigations, we are investigating several firms for possible misconduct concerning digital assets" an FTC spokesperson told Decrypt.
FTC joins SEC hunt for crypto promoters
The U.S. Securities and Exchange Commission (SEC) also has regulations for disclosures that individuals must make when promoting securities.
The agency used these rules to crack down on celebrities involved in the promotion of the EthereumMax (EMAX) token in October, announcing charges against Kim Kardashian.
According to the SEC, Kardashian allegedly failed to disclose a payment of $250,000 she received for publishing an Instagram post, which provided instructions for potential investors to purchase EMAX tokens.
While Kardashian neither admitted to nor denied the regulator’s findings, she agreed to pay $1.26 million to settle the charges and not to promote crypto securities for three years.
Kim Kardashian to Pay $1.26 Million Fine for Illegally Shilling Ethereum Token
The U.S. Securities and Exchange Commission (SEC) today announced charges against Kim Kardashian for allegedly promoting what the commission has called “a crypto asset security.” The asset in question is the EthereumMax (EMAX) token the reality TV superstar and influencer promoted last year. Other celebrities involved in the promotion of EMAX, an Ethereum-based token that generated publicity last summer, included superstar boxer Floyd Mayweather Jr.—who famously appeared in a T-shirt with the EM...
In August, the U.S. consumer watchdog group Truth in Advertising (TINA) said it was investigating 17 celebrities who promoted non-fungible tokens (NFTs) on their social media channels,” finding that “it is an area rife with deception.”
Some names on the TINA’s list included Justin Bieber, Jimmy Fallon, Madonna, Eminem, Gwyneth Paltrow, Tom Brady, Paris Hilton, and Snoop Dogg, with the Bored Ape Yacht Club, World of Women, and Autograph among the targeted NFT collections.
Otherwise, over the past two years, several crypto companies, including the now-bankrupt FTX, splashed hundreds of millions of dollars on high-profile advertising campaigns.
FTX Spent Hundreds of Millions of Dollars on Sports Marketing on Road to Bankruptcy
Crypto derivatives exchange FTX launched in 2019 and soared to a $32 billion valuation in just three years—now the rocket ride is ending in Chapter 11 bankruptcy. Along the way, the company—flush with trading fee revenue from the mainstream crypto boom during the pandemic—spent big on sports marketing deals to raise customer awareness. In the second half of 2021 alone, FTX and/or FTX US signed deals with the NBA's Miami Heat (stadium naming rights), Major League Baseball (as the official crypto...
Before its sudden implosion last month, FTX signed deals with the NBA's Miami Heat and Golden State Warrior, Major League Baseball, the NHL’s Washington Wizards and Capitals, as well as esports giant TSM.
Crypto.com has also spent big in sports: its $700 million arena naming rights deal with the Los Angeles Lakers dwarfed FTX's Heat deal, and the exchange is also a sponsor of the 2022 FIFA World Cup in Qatar.
