What Are the Rules for Celebrities Promoting NFT?

What Are the Rules for Celebrities Promoting NFT?

NFT
April 25, 2022 by Diana Ambolis
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Mila Kunis held a videoconference with Randi Zuckerberg, Mark Zuckerberg’s sister, to discuss her NFT project, “Stoner Cats,” in front of a few thousand people at home. The discussion was part of an online event hosted by MyBFF, a new crypto-for-ladies organization. Throughout the evening, speaker after speaker emphasized the need for knowledgeable women to
What Are the Rules for Celebrities Promoting NFT?

Mila Kunis held a videoconference with Randi Zuckerberg, Mark Zuckerberg’s sister, to discuss her NFT project, “Stoner Cats,” in front of a few thousand people at home. The discussion was part of an online event hosted by MyBFF, a new crypto-for-ladies organization. Throughout the evening, speaker after speaker emphasized the need for knowledgeable women to jump into the world of Web3 as soon as possible before men gobbled up all the wealth. But Kunis paused to add a disclaimer. “I never want people to think that NFTs are an investment,” she stated. “Do it because you enjoy it, because you think it’s lovely because it makes you happy.” Then she casually said that if they were presenting NFTs as an investment, the Securities and Exchange Commission would “go after” them. Given how little control there appears to be in the expanding realm of celebrity NFT shilling, it was a stunning statement.

NFTs are popular with celebrities. Gwyneth Paltrow, Eminem, Steve Aoki, Jimmy Fallon, Paris Hilton, Shaquille O’Neal, Post Malone, The Chainsmokers, DJ Khaled, Future, Snoop Dogg, Lil Baby, Mark Cuban, Steph Curry, and Serena Williams have all shared photos of their apes; Timbaland owns a BAYC NFT and has started a production company for BAYC owners. Quentin Tarantino is selling NFTs based on his original Pulp Fiction script and is one of the prominent people who have started their own ventures. Like the Bored Ape Yacht Club, others seek to draw attention to projects they’ve sponsored.

Meanwhile, Justin Bieber shared a photograph of a bored ape on Instagram in January and now has two in his digital wallet, but it’s unclear whether he paid for them directly or even owns them. Was he paid in free NFTs or ordinary American dollars to promote some of the NFTs he’s written about? (A request for comment from Bieber was not returned.) Dirty Bubble Media, a pseudonymous blog, has been recording some of the strangeness surrounding the celebrity NFT push, tracing the blockchain movement to suggest that some celebrities, including Bieber, may have a more significant financial stake in the NFTs they are endorsing than they let on.

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Right now, we don’t know. Assume that a celebrity accepts a free NFT in exchange for endorsing it. According to Bonnie Patten, executive director of consumer advocacy group Truth in Advertising, if this is the case, the FTC’s current standards on social media marketing should apply. “The law is clear that if you are given an item to promote, you must disclose that significant connection clearly and conspicuously,” she explains. Ethan Wall, a lawyer who specializes in social media legal issues, agrees. “The same laws apply to NFTs as they do to influencers who are paid to promote businesses and services,” he argues. The hypothetical celebrity would have to indicate they were supporting a product. They would have to append “#ad” or other disclosures to social media posts.

What if a celebrity received a free NFT from a third-party organization, such as a concierge service or marketing firm that acted as a go-between? Likewise, the current guidelines should be followed. According to Robert Weissman, head of consumer advocacy group Public Citizen, the core concepts of the FTC’s endorsement standards are apparent, even if they weren’t written with the complicated world of NFTs in mind. Weissman says, “One of the basic notions is that individuals have a right to know when they are being advertised to.” “When consumers are unaware that they are being advertised to, advertisers and endorsers are responsible for making affirmative disclosures to this effect.”

So, would the FTC go after celebrities and influencers who appear to be supporting NFTs without correctly reporting their financial interest? The FTC has declined to comment on its approach to NFT regulation since it is unknown.