The U.S. Federal Trade Commission (FTC) is targeting crypto companies again. This time it is going after what it considers to be deceptive or misleading crypto advertising.
On Dec. 5, the consumer protection agency said it was probing several companies. FTC spokeswoman Juliana Gruenwald told Bloomberg News, “We are investigating several firms for possible misconduct concerning digital assets.”
However, she declined to provide further details regarding which firms were being targeted.
The FTC upholds laws regarding advertising and disclosure from individuals that have been paid to endorse a product or service.
Crypto companies poured millions into high-profile advertising campaigns in 2021 and 2022. Furthermore, Crypto.com still sponsors the FIFA World Cup despite the crippling market conditions.
SEC On the Crypto Advertising Warpath
Along with the FTC, the U.S. Securities and Exchange Commission (SEC) is also on the crypto warpath. The collapse of FTX has given regulators a lot more ammunition in their battle against the digital asset industry.
The agency has regulations for disclosures that individuals promoting securities must make. It still considers cryptocurrencies to be securities, although they have yet to be officially classified as such.
In a recent high-profile case, the SEC brought enforcement actions against reality TV star Kim Kardashian. It accused her of illegally promoting a cryptocurrency on her social media channels. She didn’t admit or deny the allegations but agreed to pay a settlement of $1.26 million.
Other celebrities have also been the target of regulator wrath regarding crypto. Athletes Tom Brady and Steph Curry were among those who promoted the FTX exchange before its collapse.
Investors filed a class action suit against the pair and several others for promoting the exchange and targeting “unsophisticated investors.”
Earlier this year, the U.K. Financial Conduct Authority targeted companies for misleading crypto advertising. In August, Premier League giants Arsenal lost an appeal over action by the Advertising Standards Authority regarding misleading NFT ads.
Until crypto is fully regulated, state agencies will use every tool at their disposal to target companies promoting tokens or services.
Regulatory Red Flags
The collapse of the FTX exchange has caused one of the industry’s largest capital losses in its history. This has been more fuel for regulators, which were already poised to crack down on the industry.
Many expect 2023 to be the year of regulations as governments rush to roll out their frameworks. According to the Financial Times, U.K. regulators are finalizing their plans to regulate the industry. However, across the pond in the U.S., things are likely to take a little longer.
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