Federal agencies are missing the mark on celebrity crypto endorsements

It’s time for a review exploring whether the rules that federal agencies impose on crypto-related speech pass constitutional muster.

Shaquille O’Neal has joined the ranks of celebrities under fire for promoting cryptocurrency on social media. Celebrities including O’Neal, Kim Kardashian and Tom Brady have been sued for different reasons, but they have two things in common: crypto and speech. For example, the Securities and Exchange Commission (SEC) has brought numerous enforcement actions to curtail securities-related online communications, and several class action lawsuits have targeted athletes for making social media posts about crypto companies or non-fungible token (NFT) projects that may have no bearing on securities law.

The Federal Trade Commission (FTC) also recently introduced a new rule banning fake reviews, consumer testimonials, and the misuse of social media indicators, such as followers or views generated by a bot. Time will tell how the FTC will pinpoint violators in the ocean of frothy posts lurking on social media platforms, and how many enforcement actions await crypto users.

This is a worrying trend — not just because so many individuals are being caught up in these legal forays — but that the target of these legal actions is speech. With so many high-profile names being targeted for crypto-related speech made on social media, does this phenomenon have a chilling effect on similar speech made by the general public? What should be done to increase healthy and compliant social media communications for participants involved in paid cryptocurrency activities?

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