Consumers Caught in the Cryptocurrency Crisis: Why Celebrity Endorsers Should Not Escape Liability

Described as the “Wild West” by some commentators, the world of cryptocurrency is rapidly expanding faster than regulators can catch up. Because of this asymmetric growth, consumers are at risk of investing in fraudulent and deceptive platforms. Adding endorsements by celebrities, professional athletes, and social media influencers to the equation creates additional pitfalls for consumers. A lack of due diligence on the part of endorsers leads to significant damages and losses for trusting consumers. Regulating cryptocurrency and its advertisements is a relatively new area of the law. Nevertheless, parallels exist between the lack of due diligence in advertising cryptocurrency and in advertising health and medical products without substantiating the claim. Regarding the latter type of endorsement, the Federal Trade Commission (FTC) has cracked down on deceptive advertisements that cause harm to consumers. Current lawsuits allege that celebrity endorsers of cryptocurrency companies engaged in deceptive trade practices, violating state versions of the Federal Trade Commission Act. Historically, the FTC has only found the parent company liable in similar cases, rather than individual endorsers. This Note argues that increased regulation and enforcement actions by the FTC against individual endorsers is the most effective method to curtail deceptive advertising.