Each month, a panel of crypto legal experts examines the complexities of the industry, exploring key challenges and their implications across various global jurisdictions.
Social media influencers and Key Opinion Leaders (KOLs) have a mixed reputation in the crypto world. On the positive side, they play a significant role in educating audiences, uncovering trends, and introducing opportunities. However, the darker side reveals influencers taking payments to promote projects without full disclosure, endorsing questionable tokens, or even participating in pump-and-dump schemes.
Legally, this raises questions. If a follower invests in a project, such as “Shitcoin 2000,” based on an influencer’s glowing endorsements only to see it crash in a rug pull, what legal remedies are available? Can influencers be held accountable?
The latest controversy involves Haliey Welch, an influencer accused of manipulating a memecoin launch for personal gain. While Welch denies wrongdoing, at least one investor has filed a complaint with the U.S. Securities and Exchange Commission (SEC). Experts suggest potential charges could range from civil securities fraud to criminal accusations by the Department of Justice (DOJ).
Legal standards vary across regions. Joshua Chu, co-chair of the Hong Kong Web3 Association, and European legal experts Catherine Smirnova and Yuriy Brisov weighed in during a discussion edited for clarity.
Influencers’ Legal Responsibilities
Smirnova explains that in the United Kingdom, “finfluencers” are required to register under specific consumer protection laws. They must transparently disclose all commercial relationships and mark paid content clearly. Hidden marketing, covered by the EU’s Unfair Commercial Practices Directive, is strictly prohibited and can result in penalties.
The Markets in Financial Instruments Directive (MiFID) further applies to crypto assets treated as financial instruments, adding another layer of regulation for token promotions.
While regulations are tightening, the enforcement of these laws is still evolving, creating a dynamic and sometimes unclear landscape for influencers and investors alike.
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