It’s no secret there are tons of influencers out there getting paid to shill projects. These payments come in the form of USD, SOL, whitelist tokens, NFTs or any other manner of consideration a dev team can offer. Paid shills will continue to happen both in the shitcoin and NFT spaces probably forever. However, the act of paying to shill isn’t really an issue, after all, it’s just marketing. Where the ethical (and maybe legal) lines get blurred is when there is a paid shill with no disclosure of said shill.
The important questions to ask are: (1) are paid shills under governmental regulation, (2) if so, when and how does one disclose the payment and (3) what are the consequences of getting paid to shill something, but not disclosing it.
Are Paid Shills Under Governmental Regulation
Unlike a lot of crypto, this likely IS an area that is under governmental regulation (your favorite influencer just started sweating). The U.S. governmental body that regulates this is the Federal Trade Commission (the “FTC”). The FTC has remarked that those who endorse a product through social media should “make it obvious” when theres a connection between the influencer and the product (*cough* Bitboy *cough*).
When and How to Disclose Payment
The When: When you have a financial, employment, personal, or family relationship with a brand. Since all of Solana and NFT land is obsessed with “building a brand!!!!” right now, this is especially on point.
The How: This one is pretty simple… SAY IT. Say #ad, say “I’m biased because I’m being paid to see this,” say literally anything that makes it obvious you’re not just shilling out of the goodness of your heart.
Consequences of Not Disclosing
Injunction, cease and desist letters, and the biggest deterrent of all? A massive civil penalty of up to $43,792 per violation. Is each tweet a violation? Not sure, but if it is, big yikes for the influencers throwing retail under the bus.
The Conclusion
Not disclosing paid shills is likely illegal and regulated by the FTC. What would it take for the FTC to act on these paid shills? Likely a lot of complaints, some really egregious rugs or maybe the wrong person in the FTC getting rugged, who knows. That said, it is a risk factor, and frankly, this is an area I’d like to see regulated more.