In October 2022, reality TV star Kim Kardashian faced a hefty fine of US$1.26 million from the US Securities and Exchange Commission (SEC) for promoting EthereumMax (EMAX) tokens on her Instagram without disclosing the hefty sum of US$250,000 she received for the endorsement. This raises concerns about the rising trend of influencers promoting cryptocurrencies without providing proper information, putting consumers at risk.
Global Regulatory Responses to Crypto Advertising
Internationally, regulatory bodies are responding to the risks associated with influencers promoting cryptocurrencies. In Spain, the CNMV passed legislation requiring influencers to submit crypto asset campaigns for review at least 10 days before publication. Singapore's Monetary Authority issued guidelines restricting crypto platforms from advertising to the general public. In the UK, the Advertising Standards Agency (ASA) investigates crypto promotions, banning ads deemed misleading or irresponsible.
The UK government announced in January 2022 its plan to regulate crypto assets under the Financial Conduct Authority (FCA). This move is crucial for consumer protection and potential legal actions, granting consumers the right to pursue damages for breaches of FCA rules.
Legal Liability of Influencers in the UK
Despite regulatory advancements, the legal implications for influencers involved in promoting crypto assets remain complex. Two key torts under English law—fraudulent misrepresentation and negligent misstatement—could hold influencers personally liable for losses resulting from their promotions.
Fraudulent Misrepresentation
To establish fraudulent misrepresentation, it must be shown that the influencer knowingly made a false representation, intended it to be relied upon, and caused a loss to the party relying on it. Influencers, driven by urgency and hype culture, might be prone to reckless statements, taking advantage of the fear of missing out (FOMO). The compensation method, whether in fiat or cryptocurrency, plays a role in assessing culpability. For instance, the "pump and dump" schemes, where influencers artificially inflate prices for profit, present a clearer case for fraudulent misrepresentation.
Negligent Misstatement
Claiming negligent misstatement requires demonstrating a duty of care, breach of that duty, and resulting loss. Establishing a duty of care is challenging, involving the foreseeability of loss and a special relationship between parties. The rise of crypto advertising may necessitate extending legal duty of care to individual influencers and their predominantly younger adult followers, mirroring recommendations made for social media companies in 2019.
Jurisdictional Challenges
While the discussion revolves around English law, jurisdictional issues arise when influencers or their followers are located internationally. This complexity adds layers to legal claims, involving matters such as service of proceedings and enforcement of judgments.
English courts have shown a willingness to address losses in crypto assets and establish legal principles for claimants. However, challenges persist, especially when "following the money" becomes difficult. Claims against influencers involved in promoting fraudulent schemes may bring unwarranted attention to social media influencers, emphasizing the need for caution and responsibility in crypto asset promotions.
Mastering the Crypto Cosmos: Navigating Influencer-Driven Markets with Insightful Crypto Trading Courses
As individuals navigate the complexities of crypto assets and the potential pitfalls associated with influencer-driven promotions, learning the ropes through structured crypto trading courses becomes important. These courses provide a structured environment for enthusiasts to learn cryptocurrency trading from experts in the field. As the crypto market encompasses a multitude of assets, understanding the intricacies of top cryptocurrencies and developing the skills to make informed decisions is essential. A well-designed cryptocurrency trading course equips individuals with the knowledge and strategies needed to navigate this volatile market, empowering them to make prudent investment choices.
In the wake of regulatory developments and legal implications surrounding influencer endorsements, having a solid foundation through crypto trading courses is a proactive measure for both aspiring and seasoned traders. Whether one aims to become a cryptocurrency expert or seeks guidance as a crypto advisor, these courses offer a comprehensive education that goes beyond the hype, emphasizing responsible trading practices. In an environment where misinformation and scams are prevalent, a structured crypto trading course serves as an alarm, providing the necessary tools to decipher market trends, evaluate risks, and ultimately make informed decisions.
In conclusion, the role of social media influencers in spreading crypto scams is a critical concern, prompting regulatory responses globally. While legal avenues exist to hold influencers accountable, challenges persist, and the international nature of social media complicates jurisdictional matters. As the crypto landscape evolves, the need for responsible advertising and robust regulations becomes increasingly apparent for the protection of consumers.
For those seeking to navigate the intricacies of cryptocurrency trading and stay ahead in this dynamic environment, platforms like Blockchain Council offer invaluable resources. Blockchain Council is a distinguished group of subject experts and enthusiasts who passionately advocate for blockchain research and development, use cases, products, and knowledge. Recognizing that blockchain technology extends beyond mere transactions, serving as a financial network, software, and distributed ledger, Blockchain Council provides comprehensive cryptocurrency trading. In a world where companies are transitioning from traditional systems to blockchain, Blockchain Council emerges as a vital resource, empowering individuals with the knowledge needed to thrive in the future of finance and technology.
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