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XCelebrities Are Facing Legal Ramifications From NFT Endorsements

Celebs, like everyone else, just want to be in on what’s cool and new. In the last five to six years, that’s been cryptocurrency and NFTs. It’s a new frontier in celebrity shilling for products, but it’s not as straightforward as just holding up a favorite can of beer and saying it tastes great. The blockchain holds risks for everyone, and when you’re famous, the costs of taking those risks could get out of hand very quickly.
The List of 17
Seventeen famous names found that out in early August 2022. That’s when consumer watchdog group Truth in Advertising (TINA) sent letters to a diverse group that included A-listers like DJ Khaled, Eminem, Gwyneth Paltrow, and Tom Brady. Each letter was tailored to its recipient but included the following statement:
While TINA.org is not currently addressing a specific deceptive marketing issue pertaining to such posts, we have found that celebrity NFT promotions is an area rife with deception, including, but not limited to, a failure to clearly and conspicuously disclose the promoter’s material connection to the endorsed NFT company, as well as the omission of other material information, such as the risks associated with investing in such speculative digital assets, the financial harm that can result from such investments, and the personal benefit(s) the promoter may gain by virtue of the promotion(s).
The letter advised celebs that they were required to disclose a financial connection to whatever NFT collection they promoted and then singled out Justin Bieber and Reese Witherspoon. TINA was onto the connection between the former’s inBetweeners NFTs and the latter’s connection with World of Women NFTs.
The letter sent to Reese Witherspoon was blunt. It linked tweets the actor had posted about World of Women NFTs in 2021 and 2022 and stated that the Federal Trade Commission (FTC) "requires that social media influencers such as Ms. Witherspoon clearly and conspicuously disclose when they have any financial, personal, or other material relationship with a brand.”
Witherspoon, the letter read, “markets an NFT company (in which she has a personal stake) without ever disclosing the risks associated with investing in such speculative digital products, and the financial harm that can result from such investments.” That lack of transparency, TINA’s letter concluded, “is particularly important in light of Ms. Witherspoon’s widespread popularity among fans of varying degrees of financial experience.”
As an August 8 BuzzFeed report about the notifications pointed out, even celebrities who buy a Bored Ape out of pocket are “essentially pumping the value of their own investment” when they do anything to promote the collection, like posting an image on Instagram.
TINA’s warning letters were an important heads up for stars who don’t want to run afoul of the Federal Trade Commission. TINA’s warnings have often preceded the FTC filing legal action, known as a “Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct around Endorsements and Testimonials.” Most celebrities would rather not get hit with the kinds of substantial fines the government can levy for unfair or deceptive practices.
Seth Green’s BAYC Saga
A few months before the bulk of TINA’s letters went out, actor, writer, and ‘Robot Chicken” co-creator Seth Green discovered another danger of that blockchain life: There are legal gray zones galore.
Green had purchased a few Bored Apes (BAYC), including #8398, which he dubbed Fred Simian. Not long after he went on his shopping spree, Green fell for an old-fashioned phishing scam—he responded to a message that ultimately prompted him to enter his OpenSea login information, and in short order, some of his most valuable NFTs were transferred to the wallet of one “Mr Cheese.”
The actor was desperate to get his property back, tracking down Mr Cheese’s likely Twitter account and posting public messages asking for Fred’s return. It turned out that Green wasn’t just running a Twitter account for Fred Simian—by acquiring the copyright to Fred with his purchase, Green was building an entire mixed animation and reality sitcom, “White Horse Tavern,” around the character.
White Horse Tavern @Veecon with Seth Green and Garyvee
In the end, blockchain records indicate an account associated with Green’s known buying history was used to repurchase Fred Simian, this time for nearly $300,000.
Had Green taken the case to court, it wouldn’t have been easy for him. The blockchain was designed for anonymous transactions, and it can be hard enough for law enforcement to investigate crimes online in the first place—add in cryptocurrency security and the result can be a bit of a nightmare even for seasoned online sleuths.
Seth Green’s Bored Ape ordeal was perhaps a bit more straightforward than concerns over celebrity disclosures putting the likes of Gywneth Paltrow and Jimmy Fallon in the FTC’s crosshairs. Non-famous people buy NFTs and trade crypto daily, frequently confronting phishing attacks. What happened to him happens to a lot of consumers—the FTC reported in June this year that scammers had taken in a billion dollars since January alone.
Talking About Your Reputation
TINA’s warning letters and Seth Green’s adventures in BAYC-land are just two aspects of cryptocurrency complexity. Famous folks face other challenges when they get into crypto in some form—challenges that have more to do with PR than the law. During Super Bowl LVI in February 2022, Matt Damon and Larry David appeared in high-profile, expensive commercials for the crypto.com and FTX exchanges.
Both spots received plenty of notice on social media at the time, but in June 2022 crypto winter began. Damon’s and David’s became fodder for bitter jokes from those losing money in the tanking market and sources of schadenfreude for crypto skeptics.
The ads seemed to vanish from regular rotation pretty quickly, so it’s likely the reputational damage to either star was minimal in the long run—and after all, Matt Damon and Larry David were obviously paid spokespeople.
In a recent article for Law 360, attorneys Amy Mudge and Lauren Bass of national law firm Baker & Hostetler LLP discussed Truth in Advertising’s letters to celebrities about their lack of disclosures. Mudge and Bass acknowledged that while TINA’s letters reflected frustration with “the lack of aggressive enforcement of individual influencers,” the FTC is likely taking the right approach to these issues on its own. The government agency has published guidelines for influencers in plain, non-legalistic language and has generally taken an educational approach rather than aggressively issuing warnings.
Mudge and Bass write that the FTC’s “focus on education rather than reprimand is arguably a smarter use of the agency's limited resources. This approach has helped to increase awareness of responsibilities as well as overall compliance by brand marketers, influencers and even social media platforms.”
Still, the attorneys have some free advice for celebs still interested in an NFT collab.
“Regardless of the product or medium in which such endorsement takes place,” Mudge and Bass write, “remember to follow federal guidelines regarding endorsements and to clearly and conspicuously disclose the relationship of the parties along with the potential volatility of any digital asset investment.”
In response to dot.LA's request for additional comment, Amy Mudge says, "There has always been a focus on celebrities promoting products for companies they have a financial relationship with. The FTC and the states have focused on the importance of making clear when you are paid by a brand to promote."
Mudge, who also co-leads Baker & Hostetler's advertising, marketing, and digital media team, goes on to admit that "it is sometimes hard to see the harm from" celebrities saying they use a particular product without disclosing a profit-making relationship with a brand. "But if celebrities are paid to promote crypto investments or buying NFTs," Mudge says, "the financial outlay can be large and the short and long-term value uncertain. So, we can expect to see more enforcement activity and also litigation in such cases."
So—be clear when you get paid to tell others to invest in new, unfamiliar assets. The world of crypto is shady enough as it is.
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LA Tech Week: How These Six Greentech Startups Are Tackling Major Climate Issues
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
At Lowercarbon Capital’s LA Tech Week event Thursday, the synergy between the region’s aerospace industry and greentech startups was clear.
The event sponsored by Lowercarbon, Climate Draft (and the defunct Silicon Valley Bank’s Climate Technology & Sustainability team) brought together a handful of local startups in Hawthorne not far from LAX, and many of the companies shared DNA with arguably the region’s most famous tech resident: SpaceX.
“It's very clear that climate is no longer a niche issue,” said speaker Lauren Faber O’Connor, former chief sustainability officer for the City of LA. “It's not a boutique policy area, it's not a boutique sector of the economy, it is really becoming embedded into the future of our economy.”
Here’s a look at the greentech startups that pitched during the Tech Week event, and how they think what they’re building could help solve the climate crisis.
Arbor: Based in El Segundo, this year-old startup is working to convert organic waste into energy and fresh water. At the same time, it also uses biomass carbon removal and storage to remove carbon from the atmosphere and sequester it in an attempt to avoid further damaging the earth’s ozone layer. At the Tech Week event Thursday, Arbor CEO Brad Hartwig told a stunned crowd that Arbor aims to remove about five billion tons of organic waste from landfills and turn that into about 6 PWh, or a quarter of the global electricity need, each year. Hartwig is an alumni of SpaceX; he was a manufacturing engineer on the Crew Dragon engines from 2016-2018 and later a flight test engineer at Kitty Hawk.
Antora: Sunnyvale-based Antora Energy was founded in 2017, making it one of the oldest companies on the pitching block during the event. Chief operating officer Justin Briggs said Antora’s goal is to modernize and popularize thermal energy storage using ultra-hot carbon. Massive heated carbon blocks can give off thermal energy, which Antora’s proprietary batteries then absorb and store as energy. It’s an ambitious goal, but one the world needs at scale to green its energy footprint. According to Briggs, “the biggest challenge is how can we turn back variable intermittent renewable electricity into something that's reliable and on demand, so we can use it to provide energy to everything we need.”
Arc: Hosting the panel was Arc, an electric boating company that’s gained surprising momentum in only two years of existence. Founded in 2021, the company’s already 70 employees strong and has delivered some of its first e-boats to customers willing to pay the luxury price tag, CTO Ryan Cook said Thursday. Cook said that to meet the power needs of a battery-powered speedboat, the Arc team designed the vehicle around the battery pack with the goal of it being competitive with gas boats when compared to range and cost of gas. But on the pricing side, it’s not cheap. Arc’s flagship vessel, the Arc One is expected to cost roughly $300,000. During the panel, Cook compared the boat to being “like an early Tesla Roadster.”
Clarity Technology: Carbon removal startup Clarity is based in LA and was founded by Yale graduate and CEO Glen Meyerowitz last year. Clarity is working to make “gigaton solutions for gigaton problems.” Their aim? To remove up to 2,000 billion pounds of carbon from the atmosphere through direct air capture, a process which uses massive fans to move chemicals that capture CO2. But the challenge, Meyerowitz noted in his speech, is doing this at scale in a way that makes an actual dent in the planet’s emissions while also efficiently using the electricity needed to do so. Meyerowitz spent nearly five years working as an engineer for SpaceX in Texas, and added he’s looking to transfer those learnings into Clarity.
Parallel Systems: Based in Downtown LA’s Arts District, this startup is building zero-emission rail vehicles that are capable of long-haul journeys otherwise done by a trucking company. The estimated $700 billion trucking industry, Parallel Systems CEO Matt Soule said, is ripe for an overhaul and could benefit from moving some of its goods off-road to electric railcars. According to Soule, Parallel’s electric battery-powered rail vehicles use 25% of the energy a semi truck uses, and at a competitive cost.
Terra Talent: Unlike the rest of the startups pitching at the Tech Week event, Terra Talent was focused on building teams rather than technology. Founder Dolly Singh worked at SpaceX, Oculus and Citadel as a headhunter, and now runs Terra, a talent and advisory firm that helps companies recruit top talent in the greentech space. But, she said, she’s concerned that all the work these startups are doing won’t matter unless we very quickly turn around the current trendlines. “Earth will shake us off like and she will do just fine in 10,000 years,” she said. “It’s our way of living, everything we love is actually here on earth… there’s nothing I love on Mars,” adding that she’s hopeful the startups that pitched during the event will be instrumental in making sure the planet stays habitable for a little while longer.
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
LA Tech ‘Moves’: LeaseLock, Visgenx, PlayVS and Pressed Juicery Gains New CEOs
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
“Moves,” our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.
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LeaseLock, a lease insurance and financial technology provider for the rental housing industry named Janine Steiner Jovanovic as chief executive officer. Prior to this role, Steiner Jovanovic served as the former EVP of Asset Optimization at RealPage.
Esports platform PlayVS hired EverFi co-founder and seasoned business leader Jon Chapman as the company’s chief executive officer.
Biotechnology company Visgenx appointed William Pedranti, J.D. as chief executive officer. Before joining, Mr. Pedranti was a partner with PENG Life Science Ventures.
Pressed Juicery, the leading cold-pressed juice and functional wellness brand welcomed Justin Nedelman as chief executive officer. His prior roles include chief real estate officer of FAT Brands Inc. and co-founder of Eureka! Restaurant Group.
Michael G. Vicari joined liquid biopsy company Nucleix as chief commercial officer. Vicari served as senior vice president of Sales at GRAIL, Inc.
Full-service performance marketing agency Allied Global Marketing promoted Erin Corbett to executive vice president of global partnership and marketing. Prior to joining Allied, Corbett's experience included senior marketing roles at Disney, Warner Bros. Studios, Harrah's Entertainment and Imagi Animation Studios.
Nuvve, a vehicle-to-grid technology company tapped student transportation and automotive sales and marketing executive David Bercik to lead the K-12 student transportation division.
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
This Week in ‘Raises’: Curri Scoops Up $42M, Mosaic Scores $26M
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
A local logistics platform raised fresh funding to put toward product development, infrastructure and sales and marketing initiatives, while a San Diego-based fintech company closed its Series C funding round to expand its investment in AI which will empower high-growth SMB and mid-market finance leaders.
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Venture Capital
Curri, a Ventura-based logistics platform, raised a $42 million Series B funding round led by Bessemer Venture Partners.
San Diego-based financial platform Mosaic raised a $26 million Series C funding round led by OMERS Ventures.
AHARA, a Los Angeles-based startup focused on providing personalized nutrition suggestions, raised a $10.25 million seed funding round led by Greycroft.
Per an SEC filing, San Diego-based developer of peptide therapeutics designed to assist in the treatment of autoimmune diseases and disorders selectIon raised $5 million in funding.
Miscellaneous
Los Angeles-based Sensydia, a company working on non-invasive cardiac diagnostics, said this morning that it has received $3 million in a NIH grant.
Raises is dot.LA’s weekly feature highlighting venture capital funding news across Southern California’s tech and startup ecosystem. Please send fundraising news to Decerry Donato (decerrydonato@dot.la).
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.