What is Cryptocurrency Fraud?
Since news broke that Floyd Mayweather Jr and DJ Khaled were officially charged with cryptocurrency fraud, many casual investors have found themselves fearful.
What is cryptocurrency fraud, and how can people catch charges through promoting and investing in crypto? I
It’s a lot more complicated than it seems on the surface, and chances are, most investors who follow the rules are unlikely to find themselves on the wrong end of the law.
The Charges They Face and What They Mean
Khaled and Mayweather Jr aren’t being charged with a crime for buying or selling cryptocurrency as many headlines make it appear. They’re being charged with fraud for promoting new coins in a shady way. The Securities and Exchange Commission is pursuing them for allegedly promoting coin offerings for payment without disclosing they were paid. In essence, the charges amount to deceptive advertising.
This is similar to trouble that many YouTube personalities find themselves in. The federal trade commission requires that disclaimers be posted in the description of a video to denote paid product placement or native advertisement, an ad that seems natural and conversational but was indeed paid for. This is a different kind of trouble, but it’s similar in nature.
The difference comes in the fact that paid promotion wasn’t disclosed for an investment opportunity, rather than a product or service. The fact that information wasn’t disclosed and the promotion was based on the exchange of money and financial growth makes the charges far more serious. They weren’t promoting a $50 makeup palette or a $300 smartphone — they were promoting a limitless invisible investment that cannot be returned, guaranteed, or protected.
Can the Same Thing Happen to Me?
There’s nothing for you to worry about. Unless you’re a celebrity, crypto companies are unlikely to offer you money to promote their products. If you write about, blog about, or make videos about crypto, new coins might reach out to you. If that happens, simply don’t accept money in exchange for promotion. If you do, be extremely honest and straightforward about it. This isn’t a situation that the majority of crypto investors or enthusiasts will encounter, so there’s nothing to worry about.
