The SEC said any virtual coins or tokens bought by investors through an ICO were subject to the same laws governing the sale of stocks and shares sold via mainstream stock markets, according to BBC. Furthermore, these laws require anyone backing a security to disclose their relationship with the company offering the investment opportunity.
Moreover, the SEC cautioned against following the investment advice of any public figure, in a separate bulletin. Boxer Floyd Mayweather, Paris Hilton, and others have all publicly backed digital currency funding drives, known as Initial Coin Offerings (ICOs). Nevertheless, those promoting cryptocurrencies must say if they are being paid for the endorsement, the official warning said.
As a result, investors are encouraged to do their own research into potential money-making schemes and not rely on paid endorsements.
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