The U.S. regulators are getting concerned about the ICOs celebrity promotion calling it “unlawful”.

The popularity of Initial Coin Offerings (ICOs) as an effective method of fundraising is growing in progress attracting more and more investors all over the globe. A great amount of over $2 billion was raised via ICOs during this year, which couldn’t but draw regulators’ suspicion.

Companies and startups tend to use social media networks to promote their ICOs. Many of them use celebrities to encourage the public to purchase tokens. Such celebrity pushing does really work, but the point is that regulators doubt the stars having sufficient expertise proving that investments are appropriate.

Yesterday, November 1, the SEC issued a statement in relation to “celebrities and others” whose backing ICOs can be potentially unlawful. According to the official warning made by the SEC, any promotion is considered unlawful if celebrities’ compensation isn’t disclosed:

“Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws. If you are relying on a particular endorsement or recommendation, learn more regarding the relationship between the promoter and the company and consider whether the recommendation is truly independent or a paid promotion. We encourage investors to research potential investments rather than rely on paid endorsements from artists, sports figures, or other icons.”

The SEC didn’t mentioned any specific celebrities in the statement. However, we remember Paris Hilton to participate in the ICO held by AI Startup Lydian and DJ Khaled to pump an Ethereum cryptocurrency ICO with an ad on Instagram.

Boxing champion Floyd Mayweather is by far one of the most active ICO supporters. During the last few months he made a great promotion of Stox’s ICO, took part in Hubii Network’s ICO pushing and backed an ICO project called Centra.

The SEC announced that it will continue to focus on such types of promotions in order to protect investors and to ensure compliance with the securities laws. The agency is targeted at maintaining fair, orderly and efficient markets as well as facilitating capital formation and supporting a trustworthy market environment.

The SEC does not reject the possibility that celebrity endorsements can appear to be real unbiased opinions, but the agency warns investors about their mostly possible relation to a paid promotion. Therefore, the decision to invest money into a new project should not be based solely on an endorsement by a promoter or other individual.

In the latest statement the SEC underlined the need for research to be conducted before making investments, including in ICOs:

“Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws. If you are relying on a particular endorsement or recommendation, learn more regarding the relationship between the promoter and the company and consider whether the recommendation is truly independent or a paid promotion.”

Whether the SEC’s statement is a kind of premise to future fines, litigations or even prison sentences against market participants in the crypto space, still remains unclear. Despite all this, the number of ICOs appearing on the market are showing no sign of slowing down.

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