This may seem obvious in the light of some recent news stories, but prominent artists really do need to be careful when endorsing brand-new blockchain startups running ICOs.
The latest example is a company called Centra, which raised more than $32m last year from an ICO based on its CTR token, with plans to build a suite of financial products.
DJ Khaled joined boxer Floyd Mayweather in promoting the company at the time: for example, DJ Khaled published an Instagram post in September proudly proclaiming that “The Centra Card & Centra Wallet app is the ultimate winner in Cryptocurrency debit cards powered by CTR tokens!… This is a Game changer here. Get your CTR tokens now!”
Was that good advice? Not according to US financial regulator the SEC, which has charged Centra’s co-founders with fraud.
“We allege that Centra sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses,” said the SEC’s Stephanie Avakian.
“Endorsements and glossy marketing materials are no substitute for the SEC’s registration and disclosure requirements as well as diligence by investors,” added colleague Steve Peikin.
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