Recently a non-profit watchdog organization that goes by the name of Truth in Advertising (TINA.org) sent out notification letters to several celebrities calling them out to be involved in NFT shilling.
Shilling means to implicitly advertise and market a coin or NFT in order to increase the number of potential investors it has. Needless to say, celebrities have a massive fan following and when they advertise an NFT on their social media, it gets all the traction it needs to become successful. While there is no harm in celebrities marketing NFTs and the SEC also gives the green light for it, there is only one catch. Celebrities must openly announce the compensation paid to them and communicate the nature of the partnership to endorse or promote these non-fungible tokens. In other words, the promoter needs to disclose the material connection they have with the concerned NFT project.
However, as highlighted by the TINA group, celebrities, and other such promoters often fail to establish the true merits of the endorsement and do not publicly announce their relationship with these projects. This not only violates the FTC guidelines for the Use of Endorsements and Testimonials in Advertising but also makes these investments financially risky.
Celebrities allegedly involved in NFT shilling include, but are not limited to Tom Brady, Gwyneth Paltrow, Floyd Mayweather, Eva Longoria, and Paris Hilton. Some of the most prominent NFT companies promoted by these celebrities were World of Women, Bored Ape Yacht Club, and Autograph. Prior to this, notification letters were also sent to the lawyers of Reese Witherspoon and Justin Beiber on the account of not publicizing the association they had with their NFT endorsements. These letters are an attempt by the Truth In Advertising group to make aware and warn celebrities against the perilous effects of crypto shilling and thereby have no legal charges included. Up until now, no celebrity is facing any penalties or legal action for shilling NFT or cryptocurrency but there are multiple class action suits worked up against promoters and crypto investors such as Elon Musk and Mark Cuban for their endorsements of Dogecoin and Voyager crypto products, respectively.
In hindsight, there are two major issues with celebrities shilling NFTs. Celebrities are mostly unaware and lack the financial literacy to make informed financial decisions. While it might be suitable for them to throw some money into a project, the general public gets blindsided which makes them vulnerable. Other than this, it becomes extremely difficult to distinguish between projects that actually might have potential and do not have potential. This is primarily due to the tailor-made hype surrounding them. As a result, the market becomes volatile and is subject to speculation.
Despite all of this, NFTs and cryptocurrency have allowed for the integration of an ever-growing and independent digital economy which holds exponential growth prospects in the near future.
