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Crypto Law/Level V · Builders and launchers/5.1 Launching a token/Lesson 7

Marketing claims and consumer-protection law

Why a token that is not a security can still bring liability for what its marketing says, under the FTC Act, commodities and wire fraud law in the US, and the UK and EU promotion rules.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Say only what you can prove today. Loose enthusiasm is treated differently from specific factual claims, and every claim about safety, audits, locks, yield or fairness is tested against reality under FTC Act §5.
  2. Keep an evidence file for each factual claim, linking the lock contract, audit commit or reserves. It costs nothing and is the defence to deception claims under the FTC Act, CFTC Rule 180.1 and wire-fraud law.
  3. Exclude UK users and do not target UK audiences, rather than pay an authorised firm to approve promotions. Illegal crypto promotion to UK consumers is a crime under FSMA section 21 since 8 October 2023.
  4. For EU-facing marketing, label it as marketing, keep it consistent with any white paper and include MiCA Article 7’s ‘not reviewed or approved’ statement; where a white paper is required, publish nothing before it.
  5. Do not rely on ‘not a security’ status. The SEC’s 2025 memecoin statement left fraud to other agencies, and wire fraud carries up to 20 years whether or not the token is a security.

MaterialsSection 5 of the Federal Trade Commission Act, 15 U.S.C. §45CFTC Rule 180.1 (17 CFR §180.1) on fraud in connection with commodity salesThe FCA’s policy statement PS23/6 on cryptoasset financial promotionsArticle 7 of the EU’s MiCA Regulation on marketing communications

Wonder

  1. If a memecoin is not a security, which laws cover its marketing?
  2. Where is the line between hype and a false claim?
  3. What rules apply when people in the UK or the EU see a launch’s posts?

Explore

  1. The SEC staff statement on meme coins of 27 February 2025 said buyers of typical memecoins are not protected by the federal securities laws, but warned that fraudulent conduct may still be pursued by other federal or state agencies under other laws. The SEC’s 2026 interpretation likewise says its analysis of promises is separate from the antifraud provisions. So escaping the securities label does not mean escaping liability for false or misleading marketing. Several overlapping regimes can apply, none of which depends on the token being a security. Paid endorsements and their disclosure are covered in lesson 5.3.1.
  2. In the United States, Section 5 of the Federal Trade Commission Act, 15 U.S.C. §45, declares ‘unfair or deceptive acts or practices in or affecting commerce’ unlawful. An act is unfair only if it causes or is likely to cause substantial injury that consumers cannot reasonably avoid and that is not outweighed by benefits. On 13 July 2023 the FTC announced a settlement permanently banning the bankrupt crypto platform Celsius Network from handling consumers’ assets, with a $4.7 billion judgment suspended so remaining assets could go to customers in bankruptcy, and sued three former executives over claims that deposits were safe and always available (lesson 4.1.4).
  3. The FTC’s list of alleged false claims doubles as a list of claims to make only if true: that customers could withdraw at any time, that a $750 million insurance policy covered deposits, that reserves were sufficient, that the Earn program paid up to 18% a year, and that the company made no unsecured loans. In May 2022 the founder said in an online video that Celsius was ‘stronger than ever’. Concrete, checkable claims about safety, insurance, reserves, audits and yields are exactly what consumer-protection law tests against reality. Loose enthusiasm is treated differently from specific factual assertions.
  4. Commodities and criminal law add further layers. The joint SEC and CFTC release of March 2026 notes that some non-security crypto assets could be commodities, and CFTC Rule 180.1 makes it unlawful, in connection with a contract of sale of any commodity in interstate commerce, to intentionally or recklessly make an untrue or misleading statement of a material fact. The federal wire fraud statute, 18 U.S.C. §1343, punishes schemes to obtain money by false pretences or promises using interstate wires, with up to 20 years in prison. In the Pump.fun case, ‘fair launch’ and ‘even playing field’ were treated as factual claims that could support wire fraud (lesson 5.1.4).
  5. The UK regulates crypto marketing directly. Since 8 October 2023, a cryptoasset promotion to UK consumers must be communicated or approved by an FCA-authorised firm, made by a cryptoasset business registered with the FCA, or fit an exemption; otherwise it breaches section 21 of the Financial Services and Markets Act 2000, a criminal offence punishable by up to two years in prison, a fine or both. FCA rules require the risk warning ‘Don’t invest unless you’re prepared to lose all the money you invest’, a 24-hour cooling-off period for first-time investors with a firm, and a ban on incentives such as ‘refer a friend’ bonuses. Overseas firms are covered too.
  6. In the European Union, MiCA Article 7 requires marketing for a crypto-asset offered to the public or admitted to trading to be clearly identifiable as marketing, fair, clear and not misleading, consistent with the white paper where one is required, and to carry a prescribed statement that no EU authority has reviewed or approved it. Where a white paper is required, no marketing may go out before it is published (lesson 3.3.1). A practical check: list every factual claim in a launch’s materials, from ‘locked’ and ‘audited’ to ‘fair launch’ and yield figures, and next to each write the evidence that makes it true today.

Key facts

  • Section 5(a)(1) of the FTC Act, 15 U.S.C. §45, declares unfair or deceptive acts or practices in or affecting commerce unlawful.
  • On 13 July 2023 the FTC announced a settlement permanently banning Celsius Network from handling consumers’ assets, with a suspended $4.7 billion judgment.
  • CFTC Rule 180.1 prohibits intentionally or recklessly making untrue or misleading statements of material fact in connection with a contract of sale of any commodity in interstate commerce.
  • The federal wire fraud statute, 18 U.S.C. §1343, carries a maximum sentence of 20 years in prison in ordinary cases.
  • The UK financial promotion regime for cryptoassets took effect on 8 October 2023, and an unlawful promotion breaches section 21 of FSMA 2000, punishable by up to two years in prison.
  • MiCA Article 7 requires crypto-asset marketing communications to be fair, clear and not misleading and consistent with any required white paper.

Exercise nine, six, three, one

9CollectList up to 9 factual claims made in the marketing of a token or crypto service you know (some lists will be shorter), such as claims about safety, audits, locks, yields, listings, partners or fairness.
6ClusterSort them into 6 categories: safety and security claims, financial return claims, claims about insiders or fairness, claims about third parties such as auditors or exchanges, claims about the future, and pure enthusiasm with no factual content.
3DistillReduce the 6 to 3 groups: claims you could verify today, claims that could only be verified later, and claims that cannot be verified at all.
1CrystallizeWrite 1 sentence identifying the claim on your list that would cause the most harm if it were false, and which law discussed here would most likely reach it.

Fact check

Dates, figures and claims checked against the published sources listed below.

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