{"id":5360,"date":"2023-04-12T09:00:42","date_gmt":"2023-04-12T14:00:42","guid":{"rendered":"https:\/\/blogs.luc.edu\/compliance\/?p=5360"},"modified":"2023-04-12T09:00:42","modified_gmt":"2023-04-12T14:00:42","slug":"the-downfall-of-cryptocurrency-and-celebrities","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=5360","title":{"rendered":"The Downfall of Cryptocurrency, and Celebrities"},"content":{"rendered":"

The Downfall of Cryptocurrency, and Celebrities <\/strong><\/p>\n

Caroline Tait<\/em><\/p>\n

Associate Editor<\/em><\/p>\n

Loyola University Chicago School of Law, JD 2024<\/em><\/p>\n

Cryptocurrency entered the mainstream economy in 2013 when Forbes <\/a>listed Bitcoin as the best investment of that year, calling 2013 the \u201cyear of the bitcoin.\u201d Then, in 2014, Bloomberg <\/a>News made the statement that Bitcoin was one of the year\u2019s worst investments. Since these early days, citizens and economists alike have remained skeptical<\/a> of Bitcoin and other cryptocurrencies. Over the past few years, celebrities have gotten increasingly involved in \u201cpushing cryptocurrency and non-fungible tokens at a speed once reserved for viral dances,\u201d according to the Washington Post<\/a>. In the wake of recent events, the Securities and Exchange Commission is beginning to crack down on celebrity endorsement<\/a> that has gone too far.<\/p>\n

<\/p>\n

Background <\/strong><\/p>\n

Although Bitcoin started to gain popularity in 2013, Bitcoin\u2019s origins date back to 2009<\/a> when a programmer or group of programmers operating as \u201cSatoshi Nakamoto\u201d first launched the cryptocurrency. When Nakamoto created Bitcoin, they created a blockchain system<\/a>, where \u201ceach transaction forms an unbroken link on the chain,\u201d that was intended to function as the \u201cbackbone of the cryptocurrency market.\u201d<\/p>\n

On May 22, 2010, a day otherwise referred to as \u201cBitcoin Pizza Day,\u201d<\/a> Bitcoin was first used as a form of currency to purchase something tangible. Within this transaction, two pizzas<\/a> were purchased. The process<\/a> of purchasing these pizzas included the Bitcoins being sent \u201cto a volunteer in England, who made a transatlantic phone call and paid for the $30 delivery of pizza to Florida-based programmer Laszlo Hanyecz\u201d.<\/p>\n

The early days of cryptocurrency were marked by skepticism and trepidation<\/a> and developments over the years have done nothing to change its public perception. An example of this controversy was in 2017<\/a> when Bitcoin owners found their wallets drained while the CEO of a major Bitcoin exchange was charged with embezzlement. This came after years of scandals, such as the Mt. Gox<\/a> theft in 2010 or the Bitcoin Savings and Trust Ponzi scheme<\/a> in 2012. This 2017 incident also came before even more years of the same, with events such as the celebrities at issue in this current case, showing how the world of Bitcoin and cryptocurrency have been shrouded in judgment (rightfully so) for almost a decade.<\/p>\n

Celebrities at issue <\/strong><\/p>\n

Controversy continues to follow cryptocurreny. The Securities and Exchanges Commission (SEC) and Coinbase Global Inc. (Coinbase) are currently going head to head in a legal dispute<\/a> that will \u201chave outsize consequences for both sides.\u201d The SEC notified<\/a> Coinbase of its plan to commence a lawsuit for alleged violations of various investor-protection laws.<\/p>\n

In late March, 2023<\/a>, the SEC filed charges against numerous celebrities, such as Lindsay Lohan and Jake Paul. These charges by the SEC <\/a>are part of the larger series of charges against Justin Sun, a cryptocurrency entrepreneur, and three of his large companies. The SEC also brought these charges<\/a> against the celebrities who have been backers of Sun\u2019s crypto companies, TRX and BTT. In total, the SEC has officially charged eight celebrities <\/a>total for \u201cillegally touting TRX and\/or BTT without disclosing that they were compensated for doing so and the amount of their compensation.\u201d<\/p>\n

These cryptocurrency fraud charges specifically rest on the inclination <\/a>that Sun and his companies have been \u2018\u201corchestrating a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation.\u201d. The celebrities involved in these charges face up to $40,000 in fines <\/a>and may be required to return whatever they were paid for their Twitter promotions.<\/p>\n

The SEC\u2019s fight to regulate<\/strong><\/p>\n

As an agency<\/a>, the SEC is granted power by the Securities Exchange Act of 1934, which gives it the power over all aspects of the securities industry. The SEC is also intended to have <\/a>\u201cjurisdiction and supervision over all corporations, partnerships or associations who are the grantees of primary franchises and\/or a license or permit issues by the Government.\u201d<\/p>\n

Throughout the years, the SEC and cryptocurrency<\/a> have had a complicated relationship as it has spent much of its time going after crypto pundits by \u201ccharging various crypto startups and their respective executives with outright fraud,\u201d in 2018. The most recent case between the SEC and cryptocurrency, not involving celebrities, has been Ripple vs SEC<\/a>. Ripple is an XRP cryptocurrency<\/a> that gained traction in the end of March, 2023, as investors began to gain confidence that it would eventually win its long legal battle against the SEC. Ripple is a company that is closely associated with the token and the SEC accuses Ripple, its CEO, and its co-founder of \u201cbreaching U.S. securities laws by selling XRP without first registering it with the regulator.\u201d Ripple combats these allegations by \u201cmaintaining the view that XRP should be considered a digital currency rather than a security.\u201d<\/p>\n

This case, the fraud charges against the celebrities, and the recent developments in the cryptocurrency world will be critical to follow in the coming months to see whether this form of currency is here to stay, or if it isn\u2019t worth the trouble and skepticism it is creating.<\/p>\n","protected":false},"excerpt":{"rendered":"

Cryptocurrency entered the mainstream economy in 2013 when Forbes listed Bitcoin as the best investment of that year, calling 2013 the \u201cyear of the bitcoin.\u201d Then, in 2014, Bloomberg News made the statement that Bitcoin was one of the year\u2019s worst investments. Since these early days, citizens and economists alike have remained skeptical of Bitcoin and other cryptocurrencies. Over the past few years, celebrities have gotten increasingly involved in \u201cpushing cryptocurrency and non-fungible tokens at a speed once reserved for viral dances,\u201d according to the Washington Post. In the wake of recent events, the Securities and Exchange Commission is beginning to crack down on celebrity endorsement that has gone too far.<\/p>\n","protected":false},"author":155,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[296,547,906,1788],"class_list":["post-5360","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-bitcoin","tag-cryptocurrency","tag-fraud","tag-sec"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/5360","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/155"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5360"}],"version-history":[{"count":0,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/5360\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}