The consumer protection agency enforces laws that require truth in advertising, including rules that individuals disclose when they have been paid for endorsements or reviews.
The Securities and Exchange Commission also has regulations for the disclosures that individuals touting securities must make.
The agency used these rules to crack down on celebrity endorsements in the crypto space—most notably with a recent enforcement action against Kim Kardashian. The reality TV star didn’t admit or deny the SEC’s allegations that she illegally promoted a crypto token on her Instagram account without proper disclosure, but she agreed to pay $1.26 million to settle the issue.
Investors have sued cryptocurrency exchange FTX for false advertising, among other claims, after the implosion of the company owned by Sam Bankman-Fried. The customers, who deposited funds into yield-bearing accounts with FTX entities, allege they were misled by celebrity endorsements from the likes of Tom Brady and Stephen Curry, and weren’t aware their accounts were “unregistered securities.”