On Wednesday, Bitcoin went past record $6500. Today (on Thursday), the cryptocurrency has gone past another landmark i.e. $7300 (at the time of writing this piece). The virtual currency continues to blossom despite regulatory warning from Securities and Exchange Commission (SEC) on celebrity-endorsed Initial Coin Offerings (ICOs). The price of one Bitcoin has now amplified by more than 550% this year.
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Investors should be wary of celebrity-endorsed ICOs
SEC has strictly warned the investors to be wary of celebrity-endorsed ICOs. The agency said that celebrities who endorse token sales may run afoul of ‘anti-touting’ laws if they do not properly state what compensation, if any, they may have received.
During this year, ICOs have raised over $2 billion. Not too long ago, plenty of celebrities including Jamie Foxx, William Shatner, Floyd Mayweather and Paris Hilton have endorsed the ICO projects. However, SEC said that celebrity endorsements doesn’t necessarily mean that the investments are sound.
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In a statement, the SEC said:
“Celebrities, from movie stars to professional athletes, can be found on TV, radio, and social media endorsing a wide variety of products and services – sometimes even including investment opportunities. But a celebrity endorsement does not mean that an investment is legitimate or that it is appropriate for all investors. It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment.”
The agency further added that some of the celebrity endorsers are not familiar about the investment opportunities which they promote. SEC further added:
“Investors should note that celebrity endorsements may appear unbiased, but instead may be part of a paid promotion. Investment decisions should not be based solely on an endorsement by a promoter or other individual. Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws”
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China is among the few countries which has imposed ban on ICOs. The primary reason is that startups use this very methodology to make rapid money without even revealing fundamental information to the investors.