Why A-List Celebrities Are Still Promoting Unvetted NFT

While the backing from a large number of A-list celebrities helped to speed up the boom in the use of non-fungible tokens (NFT) in 2021 and 2022, some of those celebrities pushed unvetted projects to their supporters without understanding whether or not the projects were authentic. Even after the markets have recovered in 2023, the practise continues to enjoy widespread adoption.

In addition, the MMA fighter failed to take into account the vital fact that the frequently asked questions section of the website explains that there is no way for investors to get “Sourz” NFTs.

When Kim Kardashian pushed the EthereumMax (EMAX) crypto token to her 330 million Instagram followers in June 2021, the United States Securities and Exchange Commission (SEC) uncovered a situation that was identical to the one that had occurred in June 2021 with Kanye West. The Securities and Exchange Commission believes that by omitting to report the sum of $250,000 that she had received for the promotion, Kardashian violated the anti-touting section of the Securities Act.

Coffeezilla, on the other hand, took measures to guarantee that the people who fell for the fake NFT project were informed as soon as possible. Users are taken to a website that issues a warning about the possibility of being taken advantage of when they click the “Mint Sourz” button (as seen in the screenshot located above).

Although Coffeezilla intends to provide further details in a subsequent video, the event serves as a powerful caution to influencers and investors that they should do their own investigation before to promoting or investing in a project.

According to the fictitious creator Atto, the project Little Shapes NFT, which was established in November 2021, was a “social experiment” with the goal of shedding light on large-scale NFT bot network frauds that were taking place on Twitter.

When asked about the motivation for the creation of the NFT project, Atto replied that he required a tale that sells to ensure that no one would disregard a story that hurts. He said this when expressing his objective behind starting the project.

The planned avatar-style project known as Little Shapes, which would include 4,444 NFTs and enable owners to interact with and modify the artwork in real time, was advertised under this name.


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Randall Crater, Founder of “My Big Coin” Sentenced

Randall Crater, the person responsible for operating the fraudulent scheme known as “My Big Coin,” was given a sentence of one hundred months in prison and was ordered to make restitution payments totaling more than seven and a half million dollars to those who had lost money as a result of his scheme.

According to a statement that was released by the United States Department of Justice on January 31, the United States District Court Judge Denise Casper in the state of Massachusetts was the one who handed down the sentence that was given to Crater.

This sentence was handed down to Crater after he was found guilty by a federal jury on July 21 of four counts of wire fraud, three counts of unauthorised monetary transactions, and one count of operating an unregistered money-transmitting corporation. All of these charges were related to the same scheme. After adding up all of these fees, it became clear that Crater was running an unlicensed money transmission business.

Crater launched My Big Coin in 2013, and despite the fact that it was never intended to be a payment mechanism for cryptocurrencies, the company promoted itself as such. This resulted in the solicitation of potential victims between the years of 2014 and 2017, and the con was carried out right up to 2017.

According to Crater, the digital currencies that are available for purchase on My Big Coin are fully operational tokens that are backed by gold. Furthermore, the website has a collaboration with Mastercard to facilitate transactions.

In addition, Crater provided its users with access to a marketplace known as “My Big Coin Exchange,” which was promoted as a location at which users could trade their cryptocurrencies for fiat currencies such as the United States dollar and other currencies.

A substantial percentage of the $7.6 million in finance that Crater and his marketing team were successful in generating was used for the acquisition of a residence, many automobiles, and more than one million dollars’ worth of antiques, artwork, and jewellery.


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New clause in South Africa’s advertising code for cryptocurrency

The Advertising Regulatory Board (ARB) in South Africa has introduced a new provision for the cryptocurrency business. This clause is intended to safeguard consumers against unethical advertising in the cryptocurrency industry.

A new clause was added to Section III of the advertising code for the nation of South Africa, and it stipulates that businesses and people in the country are required to comply by specific advertising standards relating to the offering of cryptocurrency-related goods and services.

‘Expressly and clearly’ stating that investments may result in the loss of cash “since the value is changeable and may go up as well as down” is something that all advertisements, including those for cryptocurrency offers, are required to do according to the first clause of the regulation.

In addition, advertisements indicating prospective investment losses must not contradict any cautions that are given.

It is essential that marketing communications for certain services and goods be presented in a way that is “clearly understood” to the target demographics.

Advertisements are required to provide statements that are fair and impartial on the returns, features, advantages, and dangers involved with the product or service being promoted.

Rates of return, predictions, or forecasts must also be fully supported, including a description of how they are computed and an explanation of what circumstances apply to the returns that are being promoted.

Any information referring to prior performance cannot be used to guarantee future performance or returns, and it should not be presented in a manner that generates “a favourable image of the marketed product or service.” [Case in point:]

It is inappropriate for advertisements placed by bitcoin service providers who are not also registered credit providers to promote the purchase of cryptocurrencies through credit.

Nevertheless, this does not stop service providers from promoting linked payment options that they provide to customers.

Additionally, it is going to be required of social media influencers and brand ambassadors that they will conform with particular advertising guidelines.

This includes the need that truthful information be shared, as well as the ban against giving advise on trading or investing in crypto assets and the prohibition against making claims of advantages or returns.


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Crypto Ads in India to Brandish with “Highly Risky” Disclaimer

The Advertising Standards Council of India (ASCI), the sovereign regulatory body for all forms of advertisements, has published a new set of guidelines for stakeholders in the digital currency ecosystem.


As contained in a press release shared by the regulator, the new guideline, set to kick off in April, became necessary in the wake of the proliferation of crypto ads in the past year.

According to the ASCI, the majority of these adverts often contain limited information that may prey on the naivety of Indians. In response to this perceived threat, the regulators mandate that all adverts must carry the disclaimer;

“Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.” 

The disclaimer must be visible in both print and other forms of media. Specifically, TV Ads that are more than 2 minutes long are mandated to contact a clear voiceover of the disclaimer at the beginning and end, respectively. Additionally, the ASCI said the disclaimer must remain on TV screens for a minimum of five seconds.

As a major caution, the ASCI said adverts should not contain the words “currency”, “securities”, “custodian”, and “depositories”, as this can be misconstrued by the investing public as though cryptocurrencies are regulated commodities.

“We had several rounds of discussion with the government, finance sector regulators, and industry stakeholders before framing these guidelines,” said Subhash Kamath, Chairman of ASCI, “Advertising of virtual digital assets and services needs specific guidance, considering that this is a new and as yet an emerging way of investing. Hence, there is a need to make consumers aware of the risks and ask them to proceed with caution.”

While crypto ads are becoming one of the most prevalent ways for Virtual Assets Service Providers (VASPS) to publicize their products and services, regulators, including those from Singapore, UK and France, are tightening their efforts. With the India ad watchdog joining the trend, expectations now mount for more to join in the near future.

Image source: Shutterstock


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Coinbase Traffic Hits Historic Highs Following Super Bowl Ad, Jumping to Top 2 on App Store

Following a minute-long ad worth $14 million meant for the Super Bowl, US-based crypto exchange Coinbase raked in the dividends because traffic reached historic highs.

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Reportedly, the traffic was overwhelming, resulting in the Coinbase app surging to the second spot from the 186th position on the Apple store, according to Block Research.

The Block added:

“Crypto apps shot up App Store download charts in the US on Monday morning, after a Super Bowl studded with digital assets advertising. Super Bowl LVI’s face-off between the Cincinnati Bengals and Los Angeles Rams also saw two of the biggest crypto exchanges, FTX and Coinbase, compete for eye-balls.”

Surojit Chatterjee, the Chief Product Officer at Coinbase, took to Twitter and confirmed the company’s significant traffic witnessed following the advertisement. He stated:

“Coinbase just saw more traffic than we’ve ever encountered, but our teams pulled together and only had to throttle traffic for a few minutes. Humbled to have been witness to this.”

He added that the Coinbase landing page also went haywire.

“We had over 20M hits on our landing page in one minute. That was historic and unprecedented.  We also saw engagement that was 6 times higher than our previous benchmarks.”

The Super Bowl is usually a battle of the titans, given that it’s the annual playoff championship game of the National Football League (NFL). 

Therefore, it’s a famous game on American soil and beyond, making companies splash significant amounts to get notable airplay. 

For instance, Singapore-based crypto exchange platform Crypto.com selected NBA’s four-time most valuable player (MVP), LeBron James, as its new weapon for mainstream adoption during the Super Bowl. 

This move was seen as a stepping stone towards crypto adoption because his influence and reputation go beyond the sphere of basketball and sports. 

Image source: Shutterstock


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Clampdown on crypto ads: A one-off or a new phase of global regulation?

Over the last week, regulators in three major jurisdictions across two continents introduced new rules governing cryptocurrency-related promotions and advertisements. Citing consumer risks associated with digital asset investments, authorities in the United Kingdom, Singapore and Spain tightened the requirements around crypto firms’ marketing messaging and customer recruitment practices. While some experts view this emerging trend as a sign of a new global phase of cryptocurrency regulation, questions about the efficiency and universal applicability of this approach persist.

New measures

In the United Kingdom, Her Majesty’s Treasury issued a report summarizing the results of a public consultation on crypto-asset promotions, published in July 2020, as well as the government’s further steps in bringing such promotions within the regulatory perimeter. The key takeaway here is that crypto-related marketing messages are to be included in the scope of the Financial Promotion Order, meaning that the same rules will apply to them as those governing promotions of traditional financial products.

The National Securities Market Commission, Spain’s chief securities regulator, announced a new set of requirements that will apply to digital asset firms targeting 100,000 people or more with their ads, as well as those relying on social media influencers to promote their products and services.

In both the U.K. and Spain, regulators will require crypto promotions to abide by the principles of clarity and fairness while also prominently featuring risk disclosures. Ads’ sponsors will also have to either seek pre-approval (U.K.) or notify the authorities (Spain) of the upcoming campaigns.

The guidelines issued by the Monetary Authority of Singapore feature even more severe limitations. Essentially, the regulator will allow digital asset service providers to advertise solely on their own platforms, while physical ads in public spaces or using third parties such as social media influencers are entirely off limits.

Drivers of the new approach

Up until recently, regulators largely afforded crypto firms a wide latitude as far as promotional activity was concerned. If anything, it was big tech firms that experimented with censoring crypto-related ads on their platforms. Now, financial regulators are moving into the front seat.

Nathan Catania, partner at digital asset firm XReg Consulting, sees this development as a sign of a shifting regulatory landscape. Catania commented to Cointelegraph:

Jurisdictions that have ironed out AML/CFT regimes are now looking at other prominent crypto risks and it is clear that consumer protection is high on the agenda. Many large crypto players have been ramping up advertising campaigns in the last year or so and this is drawing the attention of policymakers and regulators who will want to ensure that these adverts are not misleading consumers.

In an XReg’s report on the topic, Catania and his colleagues further argue that the crypto industry players “can expect regulatory authorities in other countries to follow suit in the coming months,” noting that the wave of restrictions on crypto promotions can represent the “second phase of crypto asset regulation,” focused on consumer protection.

Indeed, one way to look at the intensifying regulatory attention to digital asset promotions is that there exists a logical sequence of measures to which governments assign varying levels of priority. Another interpretation seems feasible as well, whereby authorities simply react to an emerging reality, regardless of whether they consider the more fundamental regulatory boxes successfully checked.

Naturally, the growth and mainstreaming of the digital asset space in recent years resulted in crypto businesses expanding their outreach to audiences far beyond the original core of the movement. While the exact numbers are difficult to pin down, it is clear that in the past year the volume of crypto ads across many countries and platforms — from Indian TV to London’s public transport — has massively increased.

In the light of these dynamics, as regulators’ thinking goes, it is likely that people with insufficient understanding of crypto as an asset class will get exposed to bad-faith promotional messages. Some of them could then be tempted to invest or otherwise participate in digital finance without being fully aware of the risks.

A global trend?

Reliable data on the effects of the new restrictions on crypto promotions is unlikely to appear anytime soon, and at this point it is impossible to tell whether it will have major effects on people’s financial wellbeing or crypto companies’ bottom line.

Changpeng Zhao, CEO of crypto exchange Binance CEO, opined that the growing trend will not affect the demand for digital asset products because word of mouth is the primary marketing tool in this space.

It is also not warranted that the regulatory concern for cryptocurrency promotions will be equally distributed geographically. For one, in the United States, there are currently few signs of crypto ads being in government watchdogs’ crosshairs.

Raul Garcia, financial services principal at Florida-based accounting services firm Kaufman Rossin, noted to Cointelegraph that in the United States, regulatory focus is on taxation and investor protection, whereas promotional messages remain outside of the scope of the authorities’ attention. Garcia commented:

Everywhere you look in the U.S. there’s something about crypto, they’re advertising […] And I really don’t see any strong resistance, any limit to crypto promotion or anything like that. Too much money to be made!

The difference between the jurisdictions ramping up cryptocurrency ads oversight and the U.S. can be attributed to the heightened focus on consumer protection characteristic of many European nations and Singapore versus the American free-market focus. All other regulatory considerations held equal, more relaxed rules for digital asset promotions could make the U.S. a more attractive destination for crypto companies in the future.