
Two Celebrities Charged with Unlawfully Touting Coin Offerings - smacktoward
https://www.sec.gov/news/press-release/2018-268
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i_am_nomad
Someone once commented about this, “You shouldn’t take investment advice from
someone who gets punched in the face for a living.”

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IkmoIkmo
I mean... sure... but then, Mayweather is one of a handful of people who's
ever grossed more than $1b in personal earnings, together with Michael Jordan
and Tiger Woods. And some boxers have done terrifically financially outside of
boxing, too, take George Foreman who made a quarter billion dollars off of a
grill. The entire reason Mayweather was even asked to promote this thing is
because he represents financial success like almost no other athlete on the
planet ever has in the history of mankind. It's easy to dismiss him as a guy
who gets punched in the face for a living, that's not the issue here.

At the same time I can list hundreds of people who give poor financial advice
who have advanced degrees and decades of experience in finance. I mean hell,
Mike Tyson is the posterboy for a boxer with some of the highest earnings who
ended up bankrupt, and he hired Donald Trump as his financial adviser at one
point haha.

In short, I certainly would be less inclined than average to take advice from
someone who gets punched in the face for a living, but at the end of the day,
you find smart people everyone, and you find treacherous people everywhere,
too. I'd rather have an unremarkable advisor than a treacherous one (sadly
Mayweather in this case was both, but not because he gets punched in the face
for a living).

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joaorico
Don't forget Gaius Diocles, the roman charioteer [1]:

"His winnings reportedly totaled 35,863,120 sesterces, allegedly, over $15
billion in today’s dollars, an amount which could provide a year's supply of
grain to the entire city of Rome, or pay the Roman army at its height for a
fifth of a year. Classics professor Peter Struck describes him as "the best
paid athlete of all time"."

[1]
[https://en.m.wikipedia.org/wiki/Gaius_Appuleius_Diocles](https://en.m.wikipedia.org/wiki/Gaius_Appuleius_Diocles)

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mtnGoat
interesting. Where do people find this stuff? This will be my "thing i learned
today".

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keyle
Good thing it's for ICO's only. Imagine if it were for everything. A third of
Instagram would get fined...

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gammateam
> Imagine if it were for everything. A third of Instagram would get fined...

It is actually, under a different federal agency for non-securities related
advertisements.

The FTC already has ruled that people should at least put #ad on their posts,
and has already fined influencers that didn't.

When securities are involved, all you have to do is mention how much you got
paid to provide safe harbor from the federal securities regulator, and then to
provide safe harbor from private securities litigants all you have to do is
mention that you have no licenses and that the payment makes you unobjective.
Bury it in line 30 of the Disclaimer. THERE, NOW ITS LEGAL

Currently instagram and some other social media sites don't have a good way to
display long disclaimers, but you can get crafty in the stories, or in multi-
slide posts.

Unfortunately, when it isn't clear that federal securities laws apply, you
don't know if its just an FTC issue, or an SEC issue. So, we're getting there.

~~~
tptacek
The FTC is an entirely different authority than the SEC.

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gammateam
who did you write that for given that the post you replied to says

> under a different federal agency for non-securities related advertisements.

~~~
tptacek
Sorry, missed that. You're right, not a high-value comment.

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nighthawk1
It’s amazing how influential celebs can be even in matters that seem way
outside their expertise or career.

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jameslevy
The thing that blows my mind is how "influencers" will routinely be paid well
into the six-figures for sharing a photo of themselves using a product, and
apparently that's the most effective way for these brands to use their
marketing budget.

~~~
giarc
Marketing departments have a budget and they have to spend it. The connection
between A (spending the money) and B (people buying the product) doesn't have
to be that well supported. A lot of advertising is just "brand awareness". A
company wants their brand the last one you saw when you walk into a grocery
store.

~~~
nitwit005
I suspect this is comparably easy to measure since it's often a single event?
I know some YouTube sponsors do so because they see the traffic/sale spike,
which lets them estimate the effect.

You may recall some books spiking up the best seller lists because Oprah
recommended them.

~~~
giarc
In the case discussed here (celebrities pumping ICOs) it would be easy to
manage because they likely have affiliate links or specific urls. Even without
those, the ICO could watch incoming traffic over a certain time and see the
spike of IG visitors after a post.

In my original comment, I was more referring to advertisement like Tide
putting up a billboard. How do they know it works? Well, I'm sure they do
market surveys "Have you seen this billboard?" but it's probably full of bias.
But in the grand scheme of things, it's just for market awareness as I said.
Keep Tide on the minds of consumers.

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jmull
I wonder if these payments to celebrities worked?

E.g., did the $100K that Centra Tech gave Floyd Mayweather Jr (according to
the article) pay off for them?

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chris_wot
I have never quite understood the definition of a security. The Wikipedia
article doesn't really help, unfortunately.

~~~
tptacek
If you use the shorthand "tradable financial instruments sold in anticipation
of appreciation or money returns" you won't be far off.

The law in the US makes a sort of essential determination that no reasonable
person stakes their livelihood on the appreciation of a pair of exclusive
sneakers, which is why Instagram "influencers" aren't generally on shaky legal
ground.

~~~
patio11
My nitpick is that "tradable" is non-central to the definition, even though
most things that people think of as securities are both tradable in theory and
have active markets in them.

A security without an active market in it? Still a security. A security which
can't be traded even theoretically? Still a security.

A reason to make this nitpick is that promoters sometimes use "Oh this is just
a commercial relationship between business partners and we're locking you into
it in all sorts of interesting ways; therefore, we're not offering a security"
as an argument. The government takes a dim view of it. (This was a major issue
in the fractional orange groves case.)

~~~
tptacek
I agree; another colorable shorthand might be "if someone can plausibly claim
it's a security, it's probably a security".

I think the important bit for this thread is to distinguish between product
endorsement and investment endorsement. The law, of course, sees those as two
very different things.

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droopybuns
professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled,
known as DJ Khaled

~~~
barrow-rider
Obligatory DJ Khaled "You played yourself" quote.

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jhwang5
What about John McAfee?

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woah
You can get him to tattoo your ICO on his body. Next level:
[https://www.chepicap.com/en/news/5022/mcafee-s-new-
skycoin-t...](https://www.chepicap.com/en/news/5022/mcafee-s-new-skycoin-
tattoo-sees-the-coin-rise-12-.html)

~~~
wavefunction
Why would I want to support such a creep though? Booty bumping bath salts with
his sixteen year old girlfriend while he plots the murder of his neighbor,
then runs away when he realizes his life of crime is a poor choice of his time
given the consequences?

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rhizome
You'd run away too if you could, if you knew what was good for you.

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michaelt
I think wavefunction is implying McAfee shouldn't have committed the crimes in
the first place.

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rhizome
Sure, and I'm not sure I'd invite McAfee to dinner, but regardless of whether
he committed a crime or not I'd be looking for the exits when the law
enforcement of many SA countries came looking for me. Even teen-fucking
murderers have a sense of self-preservation.

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animex
Man the SEC takes no prisoners. Everyone fears them. Everyone cuts a deal with
them. The SEC always gets it's perp. I wish everyone feared the Law like they
do the SEC. I wish the Law could execute like the SEC does. Heck, they even
got Martha.

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t0mbstone
I don't understand how someone can get in trouble for promoting imaginary
currency.

Can you get in trouble for promoting fake money from Monopoly and trying to
convince people that the collectible value of the Monopoly money will
increase?

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JumpCrisscross
> _Can you get in trouble for promoting fake money from Monopoly and trying to
> convince people that the collectible value of the Monopoly money will
> increase?_

Monopoly money isn’t a security. ICO tokens are. Securities laws, including
those requiring disclosure of sales incentives, apply to securities.

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ttty
> It's an entity with a value specified by the eminent. If it's a fashion
> startup, one token can be equal to one dress or a yearly license of a
> software in case of a hi-tech startup. You even can issue tokens of yourself
> and a token holder will be able to buy an hour of your work with the token.
> You can “tokenize” everything.

From
[https://www.google.com.hk/amp/s/cointelegraph.com/ico-101/wh...](https://www.google.com.hk/amp/s/cointelegraph.com/ico-101/what-
is-an-ico-token-and-how-does-it-work/amp)

So basically if you top up your namecheap account it will count as a token?
Looks like yes, from this definition. Please explain to me why I'm wrong.

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davidmr
Like any other thing the SEC would consider a security, it’s complicated and
technical. The article refers to
[https://www.sec.gov/litigation/investreport/34-81207.pdf](https://www.sec.gov/litigation/investreport/34-81207.pdf)
as the SEC’s basis for considering how “coins” relate to securities.

