The US Federal Trade Commission (FTC) is reportedly investigating “several” cryptocurrency firms.
The agency, which enforces laws that require truth in advertising, is looking into whether the firms ran deceptive or misleading advertisements, Bloomberg reported Monday (Dec. 5).
Reached for comment, an FTC spokesperson told PYMNTS via email, “While we can’t comment on current events in the crypto markets or the details of any ongoing investigations, we are investigating several firms for possible misconduct concerning digital assets.”
This news comes about two weeks after Bloomberg reported that celebrities who endorsed now-bankrupt cryptocurrency exchange FTX were facing at least three lawsuits from people attempting to recover their losses.
Celebrities who promoted the firm could be held liable for damages if the lawsuits proceed, especially if those products are found to be securities.
The lawsuits alleged that these endorsements drew in unsophisticated investors.
About two months before that, Kim Kardashian agreed to pay a $1.26 million fine in a case that revolved around her “touting” of the EthereumMax cryptocurrency — which the Securities and Exchange Commission (SEC) says is a security under its jurisdiction — without properly disclosing that she had received financial compensation for doing so.
The SEC has filed several similar cases over other cryptocurrency offerings dating back to 2018, including a case against Floyd Mayweather Jr. and DJ Khaled, and one against Steven Seagal — all of whom settled.
In February, the Wall Street Journal reported that numerous crypto exchanges had been paying top dollar to run ads during the Super Bowl, which is still one of the most expensive advertising slots on TV.
Sponsorship consulting firm IEG said at the time that crypto industry spending on sports sponsorships could amount to over $160 million for North American companies — more than the amount being spent by airlines, quick-service restaurants and wine and spirits companies.