The financial collapse of FTX regarded as one of the largest cryptocurrency exchanges in the world brought with it not only financial losses to more than 3 million investors but also a legal headache to superstar celebrities who promoted and endorsed the crypto giant in major advertisement campaigns. Despite not having a formal presence in Brazil, FTX’s official website directs its service offerings in Portuguese to the Brazilian market and apparently has damaged a number of local investors.
In a class action filed in Florida earlier this month against the platform’s founder and CEO Samuel Bankman-Fried, Edwin Garrison, one of the many investors allegedly damaged by the crypto market’s bankruptcy, sued not only Bankman-Fried but also celebrities who endorsed the business such as Brazilian supermodel Gisele Bündchen, the quarterback Tom Brady, and former basketball player Shaquille O’Neal, among other celebrities for false endorsement and deceiving practices in promoting the platform.
The liability of prominent personalities for the endorsement and promotion of products and services is not effectively something new. Only a month ago, Kim Kardashian was charged by the american Securities and Exchange Commission (SEC) touting on social media a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion. The influencer agreed to pay a fine of $1.6 million to settle the charges and cooperate with the Commission’s ongoing investigation.
In Brazil, a digital influencer has been held accountable by a small claims court for the losses of one of her followers who felt victim of a fraudulent scheme by an online retailer promoted by the influencer. The National Advertisement Self-Regulation Board (CONAR) has been highly vigilant of influencers campaigns and in line with many of the advertising regulatory boards around the world, it published in 2021 a Guide of Advertisement by Digital Influencers with guidelines for advertisers, influencers and media agencies about commercial content in social media.
CONAR has issued numerous decisions in which not only advertises but also digital influencers are held accountable for non-compliant campaigns especially for lack of proper disclosure of material connection between influencers and advertising. While CONAR’s decisions are self-binding and do not generate penalties and fines, they are often used as a starting point for investigations by consumer protection agencies which monitor offerings of products and services to consumers and may impose fines against noncompliance especially of Brazilian consumer legislation which holds all parties jointly and severally liable. In this scenario, it is highly recommended that the commercial relation between advertisers and influencers be formalized between the parties to ensure compliance of advertisement campaigns as well as to limit liability of the parties.