Celebrities who are paid to endorse cryptocurrencies could be breaking the law, says the Securities and Exchange Commission (SEC). The agency posted a warning about cryptocurrency endorsements that aren't accompanied by a proper disclosure of payment.

Individuals like Floyd Mayweather and Paris Hilton have used their reach to promote new coins ahead of initial coin offerings. Investigations into these coins, such as LydianCoin and Centra (which was promoted by Mayweather), have indicated they may be unreliable and people should be hesitant about investing in them.

The SEC dislikes this form of endorsement.

"Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion. A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws." - SEC

This situation is complicated due to it being unclear when cryptocurrencies should be treated as "securities." That debate is ongoing and no clear rulings have come from the authorities in the US.