Celebrities have been swift to jump into NFTs. However, their reasons for doing so are confusing their fans.
Lately, Truth in Advertising, a consumer watchdog group, sent letters to 17 celebrities, including some popular figures like Jimmy Fallon and Gwyneth Paltrow, reminding them that not revealing the material connections while posting about something (referring to NFTs) on social media infringes Federal Trade Commission (FTC) guidelines.
The watchdog group believes that when it comes to NFTs, some celebrities are able to take financial risks because of their wealth. But many helpless consumers don’t have that luxury.
Bonnie Patten, executive director of the group that sent the letters mentions that consumers deserve to comprehend the full picture behind a celebrity advertisement so that they can make thoroughly informed decisions on whether or not to invest in Non-fungible tokens.
The letter from Truth in Advertising to the celebrities also remarks that NFTs, in general, they are rife with deception and that their promotion of them almost continuously misses mentioning the risks associated with them. Here is a glimpse of the remark in the letter:
We have found that celebrity NFT promotions are an area rife with deception, including, but not limited to, a letdown to clearly and conspicuously disclose the promoter’s material connection to the supported NFT company, as well as the omission of other material information, such as the risks associated with investing in such speculative digital assets, the financial harm that can result from such investments and the personal benefit(s) the promoter may earn by virtue of the promotion(s).
The letter goes on to remind the celebs that material connections to an NFT collection should be indicated in any social media post. While it’s ambiguous what connection these celebrities have to the NFTs they post about, there are two celebrities where the association is clear,
Justin Bieber, who is known as an investor in the inBetweeners NFT project, and Reese Witherspoon, whose company Hello Sunshine is an associate of World of Women NFTs. Both received more strict letters from the group in June.
List of 17 Celebs who received letters for promoting NFTs
DJ Khaled, Paris Hilton, Drake Bell, Eminem, Eva Longoria, Floyd Mayweather, Gwyneth Paltrow, Jimmy Fallon, Logan Paul, Madonna, Meek Mill, Neymar Júnior, Shaquille O’Neal, Snoop Dogg, Timbaland, Tom Brady, and Von Miller.
When a celebrity or influencer gets involved in an NFT collection and then posts about it on their social media, they may be impacting the value of the entire NFT collection. Even if they spent for the NFT with their own money, they are basically pumping the value of their own asset.
If a celeb buys an NFT early on for cheap and then tweets about it or for instance when Paris Hilton appeared on Jimmy Fallon’s The Tonight Show talking about her Bored Ape, can raise the value of the NFT, so they can then make a profit when they trade later on.
To further complicate the matter, sometimes celebrities pay for their own NFTs, other times they are given free ones by the collection owners. When Jimmy Fallon altered his Twitter avatar to an image of a cartoon owl, it was after he was gifted a free Moonbird NFT by the collection’s owners as part of their plans to offer free NFTs to friends or explicitly for marketing purposes. Fallon’s advertisement of the Moonbird collection boosted its value but he never revealed that it was a freebie. Fallon also received a letter from Truth in Advertising as well.
The letters by the organization are just soft reminders. In the past, Truth in Advertising has made this a first step in a series of escalations that ultimately lead to FTC involvement.
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