The US Federal Trade Commission (FTC) is once again targeting crypto companies. This time, he is taking on what he considers to be misleading or misleading crypto advertising.
On December 5, the consumer protection agency said it was investigating several companies. FTC spokeswoman Juliana Gruenwald told Bloomberg News, “We are investigating several companies for possible misconduct regarding digital assets.”
However, she declined to provide further details about the targeted companies.
The FTC enforces laws regarding advertising and disclosing who has been paid to endorse a product or service.
Crypto companies poured millions into high-profile advertising campaigns in 2021 and 2022. Additionally, Crypto.com is still sponsoring the FIFA World Cup despite the crippling market conditions.
SEC on the Crypto Advertising Warpath
Along with the FTC, the United States 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 people promoting securities must make. It still considers cryptocurrencies as securities, although they have not yet been officially classified as such.
In a recent high-profile case, the SEC filed lawsuits against reality TV star Kim Kardashian. He accused her of illegally promoting a cryptocurrency on her social media. She neither admitted nor denied the allegations, but agreed to pay a $1.26 million settlement.
Other celebrities have also been the target of regulators’ ire over crypto. Athletes Tom Brady and Steph Curry were among those who promoted the FTX exchange before its collapse.
Investors have filed a class action lawsuit against the pair and several others for promoting the exchange and targeting “unsophisticated investors”.
Earlier this year, the UK’s Financial Conduct Authority targeted companies for misleading crypto advertising. In August, Premier League giants Arsenal lost an appeal following an action by the Advertising Standards Authority over misleading NFT adverts.
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 caused one of the industry’s largest capital losses in its history. This has been more fuel for regulators, who were already on the verge of cracking down on the industry.
Many expect 2023 to be the year of regulation as governments race to roll out their frameworks. According to the Financial Times, UK regulators are finalizing their plans to regulate the industry. However, across the pond in the US, things might take a bit longer.