Celebrities Made Big Money off Cryptocurrency Marketing. But Jail Time Could Result. - BlockTelegraph

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Big Money

Callout: If you’re a celebrity, you could unwittingly face serious consequences for shilling a cryptocurrency.

Cryptocurrency is huge — and in this space, celebrity and influencer marketing is bigger than ever. But while some providers and celebs are winning the race in the blockchain and digital currency sector, others (both the providers and the celebrities who shill them) are not only bad news, but their efforts may be illegal as well.

For example, the Securities and Exchange Commission (SEC) recently charged two men with illegally taking $32 million from investors for an ICO (Initial Coin Offering). For anyone unaware, an ICO — unlike an “IPO”, a legal and sanctioned initial public offering — is a controversial crowdfunding mechanism for raising money for a digital currency venture. Many of these offerings are legitimate and all are (likely) subject to the jurisdiction of SEC regulation. But in this case, the company was an allegedly fraudulent startup called Centra Tech.

Of note in the realm of celebrity marketing: the scheme was heavily touted on social media by champion boxer Floyd Mayweather and musician DJ Khaled. Were they complicit in the fraud? According to the Financial Times, the SEC’s statement stopped short of naming the two in their statement about the two individuals charged but it noted their involvement.

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What this potentially means, according to experts, is that celebrities who have endorsed ICOs could, in the future, face legal actions from regulators or from investors who believe the star may be touting a scam.

This is not a rare occurrence.

A year ago, Paris Hilton tweeted her support for emerging coin Lydian, only to discover too late that investigation into the company revealed its CEO had previously pled guilty to charges of domestic abuse. Similarly, actor Steven Seagal became the brand ambassador a year ago for a “Bitcoin” currency until he and the anonymous founders were hit by a cease and desist order from New Jersey regulators reporting that the copycat token had not registered as a security in the state. Both actors have taken down their messages and quietly sidled away.

The Positive Side of Things

But not all celebrity and crypto alignments are bad ones. Where the combination is rocking, thus far, is in non-investment promoting arrangements. Instead, the partnerships include full involvement from the celebrity in providing awareness of the technology and participating in philanthropic forms of digital currency use.

For example, Ashton Kutcher, actor, and technology investor provided an unusual gift to Ellen DeGeneres in May when he appeared on her show. He donated $4 million in XRP tokens from Ripple to her wildlife charity, The Ellen DeGeneres Wildlife Fund. “We can transfer [the donation] into Rwandan francs right now, right here, and all we have to do is push this button, and it’s in your account,” he said.

It was a brilliant way to drive education and comfort for digital currency without pitching a particular investment or coin.

Similarly, NASGO, a fast-growing blockchain application platform recently presented on the importance of cryptocurrency as a social impact tool at the United Nations in August. Co-founders Eric Tippetts and Stephen Jiang presented on the topic at the Media for Social Impact Summit with the help of musical artist Jafaar Jackson — son of Jermaine Jackson and nephew of Michael Jackson — who is partnering with NASGO to tokenize his upcoming album.

The process of “tokenizing” with Jackson and other artists results in branded coins a celebrity (or business) can provide to customers as a loyalty program that uses the coins for VIP seating, early access to tickets, to swag and even more importantly as a means of raising money and awareness for humanitarian causes. (Before the UN event, Tippetts and Jafaar also discussed the strategy on air at NYSE in the Cheddar news segment “Making Music with Crypto.”)

This effort will continue in earnest, Tippetts says, as the company prepares for more complete announcements with Jafaar and others at an event in the Dolby Theater in L.A. at the end of next month.

In short, the combination of cryptocurrency and celebrity engagement to promote investments can prove to be a powerful way to raise awareness of the burgeoning technology and to propel social good.