SEC Issues Statement Regarding the Potentially Unlawful Promotion of ICOs by Celebrities

Today, the SEC Division of Enforcement and SEC Office of Compliance Inspections and Examinations issued an Investor Alert and a statement regarding the potentially unlawful promotion of ICOs by celebrities and individuals.

In the statement, the SEC noted that: “Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion.  A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws.”

At Digital Asset Research, we implore you to perform adequate due diligence prior to purchasing cryptocurrencies. The Investor Alert noted that this research should include checking the background of anyone recommending or selling cryptocurrencies, analyzing the business and financial considerations of token projects and weighing the risks and benefits of these projects in relation to your own investment goals. We analyze these considerations and much more in our Token Analysis reports.

If something sounds too good to be true, it often is. While celebrity endorsements may appear unbiased, often these celebrities are compensated with free or discounted tokens. Moreover, many of the recent celebrity endorsements are from individuals who lack sufficient expertise to competently judge the project, including whether the underlying technology works and whether the project complies with relevant laws and regulations.

It is never a good idea to purchase cryptocurrencies because someone famous says that it is a good idea. As you perform your own research, you may not be able to understand the information that is available. We, at Digital Asset Research, are here to help in the due diligence process.

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