Cryptocurrency influencers hype offerings — for a price
stance,” said Lex Sokolin, global director of fintech strategy at Autonomous Research in London.
Some promoters are feeling the heat.
McAfee, the antivirus software pioneer whose checkered past includes run-ins with police in Belize and a failed bid to become the U.S. LibertarianParty presidential candidate in 2016, said in a tweet to his more than 820,000 followers June 19 that he’s no longer working with ICOs or recommending them after receiving unspecified “threats” from the Securities and Exchange Commission.
The SEC fired a salvo against celebrity endorsers of ICOs in November, warning that such promoters often lack the expertise to ensure investments are appropriate. SEC Chairman Jay Clayton has said that ICOs are improperly skirting registration requirements and that the market is probably full of fraud. The Commodity Futures Trading Commission, another U.S. markets regulator, has also urged customers to avoid buying tokens based on tips shared on social media. The SEC, the futures trading commission.
Based on the specifics of the offering, an ICOmay be considered a security by the SEC, according to a primer posted on the regulator’ s website.
And anyone who promotes such an offering in exchange for compensation tied to the sale may be breaking the law if they don’t first register with the regulator, according to Richard Levin, Denverbased chair of fintech and regulation practice at law firm Polsinelli PC.
McAfee notwithstanding, the legal risks have done little to slow bounty campaigns or the ICO boom. The offerings have raised more than $11.6 billion for blockchain-related startups this year, triple last year’s record, according to CoinSchedule.
About 18 percent of cryptocurrency-related posts on Reddit, Twitter and online forum bitcointalk. now originate from bounty campaigns, according to Solume, which monitors social media posts on digital tokens. That compares with about 6 percent in January.
Although the coins earned by bounty hunters are often worth little initially, the hope is that they’ll become much more valuable if the offering is a success.