Saying ‘Not Financial Advice’ Won’t Keep You Out of Jail: Crypto Lawyers
Crypto influencers may need to practice what they preach and “do their own research” when it comes to sharing their crypto tips.
According to several digital asset lawyers, the popular disclaimer “this is not financial advice” – may not protect them in the eyes of the law.
US-based securities lawyer Matthew Nielsen of Bracewell LLP told Cointelegraph that while its “best practice” for influencers to disclose that “this is not financial advice”, he simply says the term will not protect them from the law as “federal and State securities laws largely regulate who can offer investment advice.”
Australian financial regulatory lawyer Liam Hennessy, a partner at Gadens, explained that “advisory warnings” are “by and large quite useless”, while Australian digital lawyer Michael Bacina of Piper Alderman added that they are not “magic words that when they is stated will waive the burden.”
Crypto influencers and celebrity ambassadors have increasingly come under regulatory scrutiny, particularly in the US.
Nielsen cited the recent Kim Kardashian case as an example, where Kardashian was charged by the SEC with failing to disclose how much she received for promoting EthereumMax to her followers.
Influencers feel the pressure
Crypto influencer Mason Versluis, also known as Crypto Mason, who has over a million followers on Tik Tok, told Cointelegraph that he cannot stress enough to his followers that his content should not be “taken as financial advice.”
However, Versluis said that despite using the disclaimer “this is not financial advice,” it’s important for influencers to be aware that some people are making “financial moves based on what certain influencers say.”
He also emphasized how difficult it can be to determine whether a project will end up in a “rug pull” situation as influencers “only deal with the marketing team,” and generally don’t interact “with any of the developers or owners.”
Australian crypto influencer Ivan Vantagiato, also known as Crypto Serpent, who has amassed 68,000 followers on Tik Tok, says influencers should do their due diligence to research a crypto project before running a campaign.
Related: Aussie crypto ‘finfluencers’ face tough new legal restrictions
Hennessy believes that the best way for crypto influencers to protect themselves is to be able to determine “which token is a security and which token is not a security.”
He further explained that it is important to understand that a “derivative is a product that derives its value from something else” and you can be “criminally liable” for marketing derivatives.
Meanwhile, Bacina noted that an influencer resident in Australia must have a license to provide financial advice, and that “no disclaimer is going to provide protection.”
