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Experts spoke about possible measures and consequences for celebrities and administrators of telegram channels for promoting dubious projects related to cryptocurrencies
French lawmakers have unanimously agreed on new rules to limit the promotion of cryptocurrencies with the participation of celebrities and bloggers on social networks, according to a statement by the country’s Senate, published on May 25. The law allows the promotion of the products of any cryptocurrency company registered with the Financial Markets Authority, and it could be the first such piece of legislation in Europe.
The world has not yet developed uniform rules that establish responsibility for the promotion of dubious or openly fraudulent cryptocurrency projects. In the US, regulators occasionally issue fines to influencers who are seen advertising cryptoassets.
In October 2022, the Securities and Exchange Commission (SEC) ordered Kim Kardashian to pay a record fine of $1.26 million; in March, the agency also fined a number of celebrities for $400,000, including actress Lindsay Lohan and popular rappers Lil Yachty and Soulja Boy.
However, these are isolated cases, and perhaps the fines pay off with fees. For example, according to Tara Ennison, a specialist at the Elliptic cryptocurrency analytical company, about $35 million received for the promotion of crypto projects in the field of gambling passed through the Ethereum wallet of the popular US streamer Adin Ross.
In Russia, the Central Bank advocates strengthening responsibility for illegal investment advice, including bloggers and telegram channels. This was told to RIA Novosti by the head of the service for protecting consumer rights and ensuring the availability of financial services, a member of the board of directors of the Central Bank Mikhail Mamuta during the St. Petersburg International Legal Forum.
According to him, it is necessary to strengthen the responsibility for illegal investment advice. He noted that in the main in complaints, people, referring to the advice of a blogger or a Telegram channel, buy dubious assets and lose money, and that often these “supposedly advisers” are pushing them to invest in unregulated companies.
“We also support a bill that would prohibit raising funds from citizens in companies that are not under the supervision of the Central Bank, because there is no other way to win. Plus, constant educational work in the field of investment literacy,” added Mamuta.
“Nearly impossible to prove”
The share of advertising scammers directly related to cryptocurrency in the total volume of online fraud is negligible. Moreover, the vast majority of scammers in this area only pretend to be cryptocurrency projects, but in fact they are not, says Nikita Zuborev, senior analyst at Bestchange.ru. “The real problem is significantly overestimated, and does not require such urgent and radical intervention,” the expert believes.
The main obstacle is the absence of the status of a fraudster or an unscrupulous seller for those who deceive buyers or investors, Zuborev continues. It literally takes years for the state bureaucracy to recognize pyramid schemes as such, so a compromise solution would be the creation of expert communities within each individual area of activity, which would be empowered to collect information and initiate prosecutorial checks of suspicious organizations.
At the same time, in his opinion, bloggers need clear rules of the game, and consumers need compliance with existing legislation. “But the creation of a new vague legal framework does not solve these goals in any way, so we are rather against the voiced initiative,” the analyst adds.
At the moment, there are no mechanisms for bringing such bloggers to justice, explains Andrey Tugarin, head of the law firm GMT Legal. The components of such crimes as fraud (Article 159 of the Criminal Code of the Russian Federation) and the organization of financial pyramids (172.2 of the Criminal Code of the Russian Federation) suggest the intentional nature of this crime, while many bloggers, advertising a particular product, often do not delve into its essence. In this regard, it is almost impossible to prove his intent to participate in a crime as an accomplice.
From the currently available information coming from representatives of the Central Bank, it is planned to expand the responsibility for bloggers from the point of view of not criminal, but administrative legislation on violation of the Federal Law on the securities market, in terms of providing individual investment recommendations by persons who do not have the status of an investment adviser.
At the same time, the current definition of an individual investment recommendation, as well as the possibility of using a disclaimer stating that an advice to acquire a particular asset is not an individual investment recommendation, effectively nullifies the possibility of holding such bloggers accountable.
“It should be noted that the cryptocurrency itself is not a security or a derivative financial instrument, and therefore even the tightening of legislation in the field of investment consulting will not lead to the possibility of holding accountable bloggers promoting such cryptocurrency projects,” explains Tugarin.
Area of responsibility
Responsibility for advertising fraudsters should be strict and inevitable, Zuborev believes. Of course, the criteria for exceptions should be clearly stated when the blogger himself was misled. Otherwise, the full severity of the punishment must be applied to him.
In fact, a blogger promoting a cryptocurrency scam project can only be prosecuted under the previously mentioned articles if it is possible to prove his intent to commit such acts. However, given the Russian practice on these articles, the chance is extremely low, Tugarin notes.
According to the lawyer, the Central Bank and other state bodies should pay more attention to improving the investment literacy of the population, so that the demand for such “unscrupulous” infobloggers gradually falls, and citizens can independently understand what information can be trusted and what should be double-checked with the involvement of professional investment advisers, whose qualifications are confirmed by the state body.
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