It was a crypto and memecoin shilling project on different platforms
.jpg)
At their best, key opinion leaders (KOLs) and social media influencers play an important role in crypto, educating their followers and highlighting new trends and opportunities.
At worst, though, they’re paid shills taking large allocations of coins to promote projects without proper disclosures. Sometimes, they endorse memecoin scams and pump-and-dumps (wittingly or unwittingly).
So, is this legal? When you get conned by your favorite influencer’s posts into buying Shitcoin 2000 on the promise of a once-in-a-lifetime opportunity and then lose all your dough to a rug pull the next day, is there any legal recourse?
Haliey Welch, the “Hawk tuah” influencer who went viral earlier this year, is the latest embroiled in controversy over allegations of insider trading and foul play involving a memecoin she launched. She denies the claims.
At least one investor filed a complaint with the US Securities and Exchange Commission, and legal experts suggest that if the regulator launches an investigation, it may lead to civil securities fraud charges, while the Department of Justice (DOJ) may opt to pursue criminal charges.
There are different laws in different regions, so Magazine spoke with Joshua Chu, co-chair of the Hong Kong Web3 Association, and legal experts at Digital and Analogue partners, Catherine Smirnova and Yuriy Brisov in the UK and Europe, to find out.
The discussion has been edited for clarity and brevity.
Magazine: What legal responsibilities do crypto influencers have to ensure their token endorsements are not misleading?
Smirnova: Finfluencers, or finance influencers, in the United Kingdom are obliged to get registered. This term was born in the EU, and we even have a cool website created by the European Commission, which helps you understand what’s going on and what you are obliged to do. What’s interesting is that they don’t fall under criminal regulation, but other types of regulation.
The first regulation is consumer protection laws. They apply perfectly to this field. It means that they are obliged to disclose all information about commercial partnerships, and they are obliged to label the content they create.
Magazine: What if they don’t disclose payments for promoting tokens?
Smirnova: They can be fined and found liable under the Unfair Commercial Practices Directive, which is the second regulation. It covers things like hidden marketing. These are special rules that existed before memecoins and crypto assets. Article 12 says that hidden marketing is prohibited and can result in civil and administrative penalties.
The third is the Markets in Financial Instruments Directive, which is applicable to all financial instruments in the EU, including crypto assets. It also contains rules regarding promoting financial instruments and securities.
In the EU, the E-commerce Directive of the year 2000 said platforms are not liable for any content. But this year, we now have the Digital Services Act (DSA), which says they are obliged to moderate the content to ensure they promote legal and safe services and goods.
Brisov: In the US, the Communications Decency Act and its Section 230 give unique immunity to digital platforms, but it doesn’t cover all the activities because there is a chain of case laws. It’s actually getting stricter and stricter every year. These days, platforms have to prove that they apply sufficient effort to delete, find and monitor illegal or questionable activities.
As for influencers, I’m proud to say that the US has the oldest regulation in the sphere when compared to Europe, and even the UK and Hong Kong. The Securities Act of 1933 directly mentions that every person who promotes any financial asset and does not disclose the compensation is breaking the law.
إرسال تعليق