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Two Celebrities Charged with Unlawfully Touting Coin Offerings
- nighthawk1 8y agoIt’s amazing how influential celebs can be even in matters that seem way outside their expertise or career.
- jameslevy 8y agoThe thing that blows my mind is how "influencers" will routinely be paid well into the six-figures for sharing a photo of themselves using a product, and apparently that's the most effective way for these brands to use their marketing budget.
- sandworm101 8y agoCheaper than running a superbowl ad. And much more targeted/effective.
- giarc 8y agoMarketing departments have a budget and they have to spend it. The connection between A (spending the money) and B (people buying the product) doesn't have to be that well supported. A lot of advertising is just "brand awareness". A company wants their brand the last one you saw when you walk into a grocery store.
- nradov 8y agoSpending that money can also give the marketing employees a chance to socialize with celebrities and attend some cool parties.
- nitwit005 8y agoI suspect this is comparably easy to measure since it's often a single event? I know some YouTube sponsors do so because they see the traffic/sale spike, which lets them estimate the effect. You may recall some books spiking up the best seller lists because Oprah recommended them.
- giarc 8y agoIn the case discussed here (celebrities pumping ICOs) it would be easy to manage because they likely have affiliate links or specific urls. Even without those, the ICO could watch incoming traffic over a certain time and see the spike of IG visitors after a post. In my original comment, I was more referring to advertisement like Tide putting up a billboard. How do they know it works? Well, I'm sure they do market surveys "Have you seen this billboard?" but it's probably full of bias. But in the grand scheme of things, it's just for market awareness as I said. Keep Tide on the minds of consumers.
- deleted 8y ago[deleted]
- ian0 8y agoNot saying ad spend on branding is a very optimised area in general - but the prices of billboards / tv ads etc are sky high and have a much lower degree of targeting. There is an assumption that their prospective and current customers will take note of the fact that the celeb is using their particular product and this will influence a purchase or reduce churn to a rival brand. It may be an effective channel for them. Bonkers when you take a step back. But logical given the context.
- ptd 8y agoAre you familiar with Fashion Nova? Their only form of marketing is paying a network of 3,000 influencers to post on social media about their clothes. (FYI:Some of the dresses could be considered NSFW) https://wwd.com/fashion-news/fashion-features/inside-fashion-nova-cardi-b-1202595964/ https://wwd.com/fashion-news/fashion-features/inside-fashion...
- babaganoosh89 8y agoThere was nothing NSFW in there, I was very disappointed.
- sigi45 8y agoI can confirm
- pizza 8y agoYou might be interested in reading the 1928 book "Propaganda" by Edward Bernays, the so-called "father of public relations". It describes at length how, among many other techniques, paid influencers are effective for making people value your product more (e.g. invite the top fashion blogger to wear your hat at an event, then the secondary influencers will take note, and then the proles will note after the secondary influencers, etc.). Quite creepy but eye-opening book. https://en.wikipedia.org/wiki/Propaganda_(book) https://en.wikipedia.org/wiki/Propaganda_(book)
- usrusr 8y agoWhat he probably did not predict is just how many of today's influencers are famous for very little besides getting paid for influencing. I guess we all are a bit guilty of giving our attention in part because we'd like to be like those who receive it, and getting money for what others have to pay for, . It's most visible in networks with a follow/follow-back economy like Instagram, but bloggers, conference speakers, anywhere a personal brand has wider reach than friends and family.
- downandout 8y agoA single one-off photo or video of an influencer with a product would rarely if ever produce enough revenue to justify a 6 figure spend, even with the largest influencers (Selena Gomez, Ariana Grande, etc.). Those deals with high per-post prices are usually for several posts/videos/stories. For example, a $1 million deal for 10 posts spread out over a few weeks or months with someone that has a massive following may have a reasonable chance of generating positive ROI, while a one-off deal for $100K is almost certain to lose money. It isn't just the exposure that makes it effective, it's aligning the product with the influencer. Doing this dramatically improves the conversion rate among their followers. I'd much rather have a 10% conversion rate on an influencer with 10K followers than I would want to have a 0.5% conversion rate on someone with 100K followers. I'll spend far less on the 10K media buy, and make twice the revenue. Dan Bilzerian, for example, generated over $500K in marijuana prodct sales on black Friday, largely because of his social media posts. But he has aligned his entire Instagram account and his perceived lifestyle around the brand (he owns the company). That figure represents the culmination of months of posts surrounding his brand of marijuana products. The same with Kylie Cosmetics - it has become something that Kylie Jenner is synonymous with.
- praneshp 8y agoAnd not just A-listers like these two. Jenny McCarthy is B-list at best, and she has huge influence over the anti-vaccer movement.
- t0mbstone 8y agoI don't understand how someone can get in trouble for promoting imaginary currency. Can you get in trouble for promoting fake money from Monopoly and trying to convince people that the collectible value of the Monopoly money will increase?
- theDoug 8y agoYes? This is a basis of fraud and confidence schemes. Especially when it will enrich you.
- CryptoPunk 8y agoThe basis of fraud is not promoting something. It's deceiving someone. Not all promotion is fraudulent. That being said, this particular regulatory disclosure requirement can arguably be considered a prohibition on a form of fraud, on the basis that all paid endorsements where the payment is not disclosed to the target audience are misleading the audience about the endorser's level of genuine interest in the product, and failing to disclose a materially significant fact about the endorsement that a reasonable audience would expect to be disclosed. I'm not sure if a statutory rule is the best way to address this though. Its rigidity and one-size-fits-all approach may catch a lot of non-fraudulent actions in its net, and avoiding that should be the first priority of the justice system. Common law would better account for the peculiarities of each case and how they weigh into the question of whether an action is fraudulent.
- Svexav 8y ago> for failing to disclose payments they received for promoting investments in Initial Coin Offerings (ICOs). First paragraph.
- JumpCrisscross 8y ago> Can you get in trouble for promoting fake money from Monopoly and trying to convince people that the collectible value of the Monopoly money will increase? Monopoly money isn’t a security. ICO tokens are. Securities laws, including those requiring disclosure of sales incentives, apply to securities.
- droopybuns 8y agoprofessional boxer Floyd Mayweather Jr. and music producer Khaled Khaled, known as DJ Khaled
- barrow-rider 8y agoObligatory DJ Khaled "You played yourself" quote.
- keyle 8y agoGood thing it's for ICO's only. Imagine if it were for everything. A third of Instagram would get fined...
- chris_wot 8y agoIt's for securities full stop I had thought...
- PeterisP 8y agoMost ICOs are considered by SEC to fall under securities regulations as most ICOs fit the criteria of the Howey test - if the thing you're offering requires an investment of money in some common enterprise, there is an expectation of profits, and any profit comes not from your efforts but from efforts of either whoever's selling or whoever you invest in; then selling or issuing or promoting that thing falls under all the rules and regulations for securities.
- gammateam 8y ago> Imagine if it were for everything. A third of Instagram would get fined... It is actually, under a different federal agency for non-securities related advertisements. The FTC already has ruled that people should at least put #ad on their posts, and has already fined influencers that didn't. When securities are involved, all you have to do is mention how much you got paid to provide safe harbor from the federal securities regulator, and then to provide safe harbor from private securities litigants all you have to do is mention that you have no licenses and that the payment makes you unobjective. Bury it in line 30 of the Disclaimer. THERE, NOW ITS LEGAL Currently instagram and some other social media sites don't have a good way to display long disclaimers, but you can get crafty in the stories, or in multi-slide posts. Unfortunately, when it isn't clear that federal securities laws apply, you don't know if its just an FTC issue, or an SEC issue. So, we're getting there.
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- jmull 8y agoI wonder if these payments to celebrities worked? E.g., did the $100K that Centra Tech gave Floyd Mayweather Jr (according to the article) pay off for them?
- jhwang5 8y agoWhat about John McAfee?
- woah 8y agoYou can get him to tattoo your ICO on his body. Next level: https://www.chepicap.com/en/news/5022/mcafee-s-new-skycoin-tattoo-sees-the-coin-rise-12-.html https://www.chepicap.com/en/news/5022/mcafee-s-new-skycoin-t...
- wavefunction 8y agoWhy would I want to support such a creep though? Booty bumping bath salts with his sixteen year old girlfriend while he plots the murder of his neighbor, then runs away when he realizes his life of crime is a poor choice of his time given the consequences?
- rhizome 8y agoYou'd run away too if you could, if you knew what was good for you.
- michaelt 8y agoI think wavefunction is implying McAfee shouldn't have committed the crimes in the first place.
- rhizome 8y agoSure, and I'm not sure I'd invite McAfee to dinner, but regardless of whether he committed a crime or not I'd be looking for the exits when the law enforcement of many SA countries came looking for me. Even teen-fucking murderers have a sense of self-preservation.
- jmkni 8y agoThe documentary about him really opened my eyes. I had always viewed him as an eccentric but harmless, fairly smart guy. Then you find out he date-raped his research assistant (unless you think she randomly decided to make that up). He can go fuck himself.
- i_am_nomad 8y agoSomeone once commented about this, “You shouldn’t take investment advice from someone who gets punched in the face for a living.”
- charlesdm 8y agoAnd that someone was right
- foundpinkney 8y agoThe whole idea behind FM is that he doesn't get punched at all
- IkmoIkmo 8y agoI mean... sure... but then, Mayweather is one of a handful of people who's ever grossed more than $1b in personal earnings, together with Michael Jordan and Tiger Woods. And some boxers have done terrifically financially outside of boxing, too, take George Foreman who made a quarter billion dollars off of a grill. The entire reason Mayweather was even asked to promote this thing is because he represents financial success like almost no other athlete on the planet ever has in the history of mankind. It's easy to dismiss him as a guy who gets punched in the face for a living, that's not the issue here. At the same time I can list hundreds of people who give poor financial advice who have advanced degrees and decades of experience in finance. I mean hell, Mike Tyson is the posterboy for a boxer with some of the highest earnings who ended up bankrupt, and he hired Donald Trump as his financial adviser at one point haha. In short, I certainly would be less inclined than average to take advice from someone who gets punched in the face for a living, but at the end of the day, you find smart people everyone, and you find treacherous people everywhere, too. I'd rather have an unremarkable advisor than a treacherous one (sadly Mayweather in this case was both, but not because he gets punched in the face for a living).
- Unklejoe 8y ago> he represents financial success like almost no other athlete on the planet ever has in the history of mankind What about Michael Jordon?
- jfoutz 8y agoThis is amazing. I'd always thought of the SEC as an organization that was thoroughly corrupted by regulators with deep ties to Goldman Sachs. Their amazing work on not prosecuting Enron executives or countrywide loan officers led me to believe the SEC was a toothless organization. It's amazing to see them exercise their power against brown people. Perhaps it's not skin tone based, and actually based on the finance industry's cut. Let this be a lesson to everyone.
- MechanicalTwerk 8y agoMaybe it's based on the fact they promoted ICOs to consumers without disclosing they were given tens and hundreds of thousands of dollars to do so.
- jfoutz 8y agoYou know, you're right. There are literally thousands of ICO promotors that were given nothing. They took the risk themselves. Well, they took the risk of their premined coins never becoming valuable, but there was no actual 100k$ payment. This is a brilliant insight that if you have money you can encourage people to behave unethically in exchange for a quick buck. You're right. The brown guys are the villains.
- cjensen 8y agoYou realize the CEO and COO of Enron went to jail, right? Technically, it was the FBI, but still.
- chris_wot 8y agoI have never quite understood the definition of a security. The Wikipedia article doesn't really help, unfortunately.
- tptacek 8y agoIf you use the shorthand "tradable financial instruments sold in anticipation of appreciation or money returns" you won't be far off. The law in the US makes a sort of essential determination that no reasonable person stakes their livelihood on the appreciation of a pair of exclusive sneakers, which is why Instagram "influencers" aren't generally on shaky legal ground.
- patio11 8y agoMy nitpick is that "tradable" is non-central to the definition, even though most things that people think of as securities are both tradable in theory and have active markets in them. A security without an active market in it? Still a security. A security which can't be traded even theoretically? Still a security. A reason to make this nitpick is that promoters sometimes use "Oh this is just a commercial relationship between business partners and we're locking you into it in all sorts of interesting ways; therefore, we're not offering a security" as an argument. The government takes a dim view of it. (This was a major issue in the fractional orange groves case.)
- tptacek 8y agoI agree; another colorable shorthand might be "if someone can plausibly claim it's a security, it's probably a security". I think the important bit for this thread is to distinguish between product endorsement and investment endorsement. The law, of course, sees those as two very different things.
- csomar 8y agoIt is a trade-able asset. Unlike a product, you expect a trade-able asset to increase in price (that's why you buy it).
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- animex 8y agoMan the SEC takes no prisoners. Everyone fears them. Everyone cuts a deal with them. The SEC always gets it's perp. I wish everyone feared the Law like they do the SEC. I wish the Law could execute like the SEC does. Heck, they even got Martha.