News: Is it possible to bring celebrities to responsibility?

The advertising market for ICO projects is inundated with celebrities. More and more frequently popular personalities are becoming brand ambassadors. Making a bet on a celebrity, the project initiators assure keen interest of the audience.

But who is responsible for the failure of a startup? And why does failure really pose a threat for a celebrity?

Elena Mashina, the Head of blockchain and fintech projects supporting of Law & Trust International, can answer this questions and gave a broad commentary to Coin.radio whether it is possible to bring celebrities to justice for advertising a hopeless project.

Public figures (people from show business, professional sport, etc.) in the light of the development of Social Media Marketing more and more often take part in advertising campaigns not only of world famous brands, but also in advertising of various start-ups that are ready to allocate large advertising budgets. The market for advertising ICO projects is not an exception. 

Sportsmen and show-biz stars from all parts of the world are actively involved in the promotion of such projects, acting under advertising contracts. 

Moreover, many of the public people themselves become the initiators of such projects and organize the attraction of investments by virtue of their fans and followers. Ticket coin and Buz coin, which were created and promoted by Vasily Vakulenko (Basta) and Olga Buzova respectively can serve as examples of such projects in the Russian market. In the context of the responsibility of public persons in case of failure of their project, we should proceed from the role played by the celebrity. Absolutely different consequences will be for those who acted under an  advertising contract, and for those who were themselves the organizer and advertising person.

Even as the organizer of the project, the public person takes the investment not directly, but through the company created for the project, for the debts of which no one is liable as a rule. The mechanism of civil law protection is available only by bringing the organizers to subsidiary liability for the company's debts through the bankruptcy procedure. 

But companies for the implementation of ICO, as a rule, are created abroad, and there are no real protection mechanisms in civil law. 

Here we can talk only about criminal liability for the composition of fraud, which, in turn, needs to be proved;in particular that the organizer did not intend to implement his project, but acted solely with the aim of collecting cryptocurrency or money funds of investors and escaping.

As for the participation of celebrities in the role of an advertising person, in such situation there are even fewer options for bringing to justice. 

The hypothetical chances are only to recognize the celebrity as an accomplice or accessory to commission of fraud. But for this it is necessary to prove the awareness (intent) of such a public person about the criminal intentions of the organizers of the project. Frankly, in the case of the failure of another startup, a celebrity will receive a portion of black PR and a couple of articles in the yellow press, in which they will try to reassure fans that he/she did not suspect anything like that. To confirm the above, it is worth remembering the story of hundreds of deceived citizens through the iPhone shop advertised by Ksenia Borodina. As we can all see, the advertising person has not suffered any responsibility. These are the realities of modern Russian legislation.

In accordance with the US legislation on securities, the size and nature of the remuneration for such advertising must be indicated in investment advertising. If there is no such data in the advertisement, the celebrity is an illegal distributor of securities. 

SEC has already issued a warning about bringing to administrative and criminal liability for inappropriate advertising of ICO projects and recommended to refrain from such actions. 

In this light, if there are indicators of fraud in the actions of Floyd Mayweather, who was involved in advertising the ICO project Centra Tech, which the SEC accuses of «organizing a fraudulent ICO», he may be held criminally liable.

It is worth noting that objectively a public person must not be liable for the advertised product, but taken their social significance to a certain degree, they should be more careful in choosing the advertised product and services, since potential buyers, trusting celebrities, without due circumspection agree to purchase goods/services or decide to invest in any project. As for the responsibility of the founders of the organizing companies, I stand for toughening the responsibility and the development of actual effective mechanisms for bringing to liability for the company's debts.

Celebrities tips are the last thing worth paying attention when choosing an investment object. We did not manage to find a single truly successful ICO, advertised by a celebrity. Projects backed by strong technology and a good team do not need such advertising and promote themselves by other methods. And in case of failure it is almost impossible to bring celebrity to responsibility for bad advice . You should decide for yourself whether your liking for your favourite actor, singer or sportsmen is worth your lost money.

©Elena Mashina, Law&Trust International Senior Lawyer

Commentary is posted at: coin.radio

Law&Trust International provides a full range of legal consulting services for ICO and Blockchain projects. The extensive experience of the company's lawyers and a professional comprehensive approach will save your costs and prevent from rash decisions! Link to service: ico