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- 1 Several Finance YouTubers have been sued because they promoted FTX on social media.
- 2 The lawsuit says these YouTubers failed to disclose their financial ties to FTX.
YouTubers misled viewers into believing that their opinions were unbiased. FTX had reportedly paid such YouTubers to promote its products. However, they violated the Federal Trade Commission’s(FTC) guidelines on advertising. The Securities and Exchange Commission(SEC) has also been suppressing the adoption of cryptocurrency products by influencers on YouTube.
Why were the YouTubers sued?
The lawsuit claims that the YouTubers were not licensed and the promotion of FTX violated their rules. The suit seeks an injunction against future violations. They even ordered YouTubers to pay for financial damages. The video creators deny any wrongdoings, arguing they had no idea while promoting FTX.
The FTX has accused the YouTubers of fraud and false advertising, saying they knowingly promoted the products. The company also claims that it did not know whether its employees were promoting alongside FTX products. If these YouTubers lose the case, it would have some serious implications for the future of online finance for creators.
Some of these influencers have millions of subscribers, and their videos on FTX have led to the lawsuit. The FTC has clearly stated that social media influencers must declare their partnership with cryptocurrency products. This serves as a reminder that influencers and YouTubers need to declare their collaboration with cryptocurrency while promoting products to maintain transparency.
Federal securities laws state that any influencer or individual must declare the nature or amount of compensation they get in exchange for the promotion. By November 11, 2022, the CEO of FTX had stepped down from the position and declared bankruptcy. In the following hours, FTX witnessed a massive attack in which $100 M worth of tokens in cryptocurrency. Many celebrities are also being sued for promoting FTX.
What Precautions should YouTubers take?
Influencers need to be transparent with their audiences about a potential collaboration with any specific cryptocurrency. They should inform the general audience about any sponsorships from crypto platforms. Influencers can promote cryptocurrency but should do it responsibly and with full transparency.
Cryptocurrency transactions are often anonymous and decentralized, and it is difficult to track transactions. Failure to disclose relationships might be seen as deceptive. They should educate themselves about the potential risks and portray accurate information to their audience. There are risks to investing in cryptocurrency, such as loss of capital, fraud, hacks, and regulatory bodies.
Government or central banks do not support cryptocurrencies. The value of the token is not tied to promises by any central authority. It is also possible that you might lose your transaction wallets. Most cryptocurrencies involve mining to confirm transactions. This mining consumes vast energy and can have a negative environmental impact.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
