[Exclusive] SEC Clarifies Influencers’ Accountability in Scam Projects

Editing and Additional Reporting by Nathaniel Cajuday

• In an email response to BitPinas, the Securities and Exchange Commission insisted that though there is no direct advisory against streamers, content creators, and social media personalities allegedly involved in the promotion of an unregistered project, these influencers can still be held liable when proven. 
• It was in 2022 when the Commission added streamers, content creators, and social media personalities to the list of individuals who can be criminally liable if the entity that they are involved in is proven to be illegal and unregistered. 
• The regulatory agency has cited the Securities Regulation Code, which imposes a penalty of at most ₱5 million or up to 21 years of imprisonment, or both.

Following the issue of the involvement of streamers, content creators, and social media personalities in promoting the infamous Lele Gold Farm among the netizens, the Securities and Exchange Commission (SEC) has directly responded to BitPinas, emphasizing that though the Commission currently does not have a specific advisory directed towards them, involved social media personalities may still be held liable with a heavy fine and imprisonment. 

“For instance, in our advisory on Lele Gold stated that those who act as salesmen, brokers, dealers, or agents, representatives, promoters, recruiters, uplines, influencers, endorsers, abetters, and enablers…in soliciting or convincing people to invest in the investment scheme being offered by the said entity including soliciting investments or recruiting investors through the internet may be held criminally liable under Section 28 of the SRC and penalized with a maximum fine of Five Million Pesos (Php5,000,000) or imprisonment of Twenty One (21) years or both pursuant to Section 73 of the SRC,” the SEC insisted. 

The concern was raised after streamers, content creators, and other online influencers advertised and somehow helped Lele Gold Farm gain more users. Lele Gold Farm was recently flagged by the SEC because its operation functions like a Ponzi Scheme. It was offering prospective investors a luxurious way of earning money through playing games.

Beware of Investment Scam: Lele Gold Farm Unregistered and Operating Illegally

Where after the SEC published its public advisory against Lele Gold Farm, some of the online personalities who initially endorsed the entity immediately deleted their content. Several social media users also shared their opinions regarding the issue. 

SEC Advisory vs Lele Gold Farm Draws Mix Reactions From Public, Influencers Allegedly Remove Lele Gold Content

Then, on January 17, various accounts posted on social media publicized that Lele Gold and 888 Casino were forced to shut down because of the advisory of the regulatory agency and the Philippine National Police (PNP) Anti-Cybercrime Group regarding the mobile game’s alleged Ponzi scheme.

 

Lele Gold Shuts Down Following SEC Advisory: Ponzi Scheme Scams Investors

Accordingly, as per Atty. Rafael Padilla, a lawyer who specializes in fintech and crypto, Padilla emphasized that though the current law in the country has not yet clarified the legal responsibilities of social media influencers who promoted a rug-pulled project, the potential liability of influencers is still very theoretical and that they should have some ethical liabilities

Are Project Owners and Influencers Responsible for an NFT Rug Pull?

Since 2022, the Commission has added social media influencers and content creators to the list of individuals that may be criminally liable for being involved in an unlicensed entity that entices the public to invest. 

What the regulatory agency has been emphasizing through its public advisories is the possibility of these individuals and entities not complying with the Securities Regulation Code of the country, and applying appropriate penalties and taxes assessed by the Bureau of Internal Revenue. 

“The SEC will continue to warn the public against unauthorized investment schemes through timely advisories so that they may exercise caution in dealing with such entities,” the regulatory agency concluded.

This article is published on BitPinas: [Exclusive] SEC Clarifies Influencers’ Accountability in Scam Projects 

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