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Crypto Law/Level V · Builders and launchers/5.3 Promotion and liability/Lesson 2

Celebrity promoters and class actions

How buyers sue the famous faces behind a token: the ‘statutory seller’ test, mass online solicitation, deadlines, and the FTX promoter litigation.

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. Promoters: decline pay for promoting tokens that may be securities. Under Pinter v. Dahl, a ‘seller’ is someone who solicits partly for their own financial gain, so unpaid commentary rarely qualifies.
  2. If paid, use a written contract limiting what you may say and requiring disclosure of the amount. Commissions and referral links made BitConnect promoters statutory sellers under Wildes.
  3. Buyers: section 12(a)(1) gives back the price paid, plus interest, for unregistered securities sales without proof of fraud. Sue within one year of the violation and no later than three years after the public offering.
  4. Joining an existing class action usually costs a buyer nothing up front. Check the court docket and keep purchase records, but claims exist only if the token is a security.
  5. For tokens outside securities law, state consumer-protection and fraud claims vary by state. Check your state’s limitation period before relying on them.

MaterialsSection 12 of the Securities Act (15 U.S.C. 77l) and its time limits in section 13 (15 U.S.C. 77m)Pinter v. Dahl, 486 U.S. 622 (1988)Wildes v. BitConnect International PLC, 25 F.4th 1341 (11th Cir. 2022)The docket of In re FTX Cryptocurrency Exchange Collapse Litigation, No. 1:23-md-03076 (S.D. Fla.)

Wonder

  1. Can someone who only made videos about a token be sued as if they sold it?
  2. Does a celebrity have to know the project was a fraud to be liable?
  3. How long do buyers have to bring these claims?

Explore

  1. Regulators are not the only risk for promoters (lesson 5.3.1). Buyers can sue privately, often as a class action, in which a few named plaintiffs sue on behalf of everyone in the same position. The main federal tool is section 12(a)(1) of the US Securities Act. Anyone who offers or sells a security in violation of the registration requirement is liable to the buyer for the price paid, with interest, less any income received, on handing the security back, or for damages if it has already been sold. The buyer need not prove fraud or carelessness; the unregistered sale is enough.
  2. The key question is who counts as a ‘seller’. In Pinter v. Dahl, decided on 15 June 1988, the Supreme Court held that a seller is either the person who passes title to the buyer, or one who ‘successfully solicits the purchase, motivated at least in part by a desire to serve his own financial interests’ or those of the owner of the security. The Court rejected a looser test that would have caught anyone whose involvement was a ‘substantial factor’ in the sale. A paid promoter fits the second limb more easily than a fan who posts for free.
  3. Two appeals courts have applied this to online promotion. In Wildes v. BitConnect International PLC, decided on 18 February 2022, the Eleventh Circuit considered promoters, led by Glenn Arcaro, who posted YouTube videos and websites and earned commissions through referral links. It held that a person solicits a purchase ‘whether that solicitation was made to one known person or to a million unknown ones’. On 21 December 2022, in Pino v. Cardone Capital, the Ninth Circuit agreed that promoting a security in a mass communication, including social media posts and videos, can be solicitation.
  4. These claims have limits. They exist only if the token is a security; for coins treated as outside securities law (lesson 3.2.3), buyers must rely on state consumer-protection, fraud or contract claims, which vary by state. Section 13 sets short deadlines: a section 12(a)(1) claim must be brought within one year of the violation and never more than three years after the security was offered to the public. A section 12(a)(2) claim for misstatements must be brought within one year of discovery and three years of the sale. Section 15 adds liability for persons who control a seller.
  5. The best-known test is the FTX litigation. From November 2022 investors sued FTX’s founder and celebrity promoters, including Tom Brady, Stephen Curry, Shaquille O’Neal and Naomi Osaka. The cases were gathered as In re FTX Cryptocurrency Exchange Collapse Litigation, MDL No. 3076, before Judge K. Michael Moore in the Southern District of Florida. The court docket shows the promoters’ motions to dismiss an amended complaint still being argued in 2025 and 2026. Filing a complaint proves nothing: as of October 2026 these are allegations, and no court had decided that the promoters were liable.
  6. For builders and promoters, the lesson is about evidence. Each paid post, referral link and commission record can later be used to show solicitation for financial gain. A promotion contract that spells out what the promoter may say, requires disclosure (lesson 5.3.1) and records payment will be read in court alongside the posts themselves. A practical check: for one token you have promoted or bought because of a promoter, note the date of the first public offer and the date of your purchase, and work out whether the one-year and three-year windows in section 13 are still open.

Key facts

  • Section 12(a)(1) of the Securities Act lets a buyer recover the price paid for a security sold in violation of the registration requirement, without proving fraud.
  • Pinter v. Dahl (1988) treats as a ‘seller’ anyone who successfully solicits a purchase motivated at least in part by their own financial interest.
  • In Wildes v. BitConnect (11th Cir. 2022) the court held that solicitation through mass online videos can make promoters statutory sellers.
  • In Pino v. Cardone Capital (9th Cir. 2022) the court held that promoting a security on social media can be solicitation under the Securities Act.
  • A section 12(a)(1) claim must be brought within one year after the violation and no later than three years after the public offering.
  • Claims against FTX’s celebrity promoters were consolidated in MDL No. 3076 in the Southern District of Florida and were unresolved as of October 2026.

Exercise nine, six, three, one

9CollectList up to 9 people or accounts whose promotion led you or others to buy a token, noting whether they were paid and how they promoted it (some lists are shorter).
6ClusterSort them into 6 groups: paid with disclosure, paid without disclosure, paid through referral links, unpaid fans, project insiders, and unknown.
3DistillReduce the 6 groups to 3: likely ‘statutory sellers’ under Pinter if the token is a security, unlikely sellers, and those you cannot judge without more facts.
1CrystallizeWrite 1 sentence explaining why getting paid changes how the law treats a person who talks up a token.

Fact check

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

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