Can Financial Influencers Promote Investments and Crypto?
Introduction
Financial influencers who promote investments, trading platforms, digital assets, or cryptocurrency products on social media may incur legal responsibility when their content goes beyond general commentary and becomes a solicitation, recommendation, or sale of securities.
The distinction is important. A creator may discuss financial topics in general terms, but an unregistered person should not represent that an investment is safe, guaranteed, or certain to produce profits. Liability may arise even when the influencer did not personally receive the investor’s money or sign the investment contract.
Philippine securities laws also apply to investment schemes promoted online. The use of Facebook, TikTok, YouTube, Telegram, livestreams, or other digital channels does not remove the need to comply with registration, licensing, disclosure, and anti-fraud requirements.
What Investments Are Covered?
The Securities Regulation Code, or R.A. No. 8799, generally requires securities offered or sold to the public to be registered with the Securities and Exchange Commission (SEC), unless an exemption applies. Section 8.1 prohibits the sale or offer of securities without an approved registration statement and the required information for prospective purchasers. This rule is discussed in Power Homes Unlimited Corporation v. Securities and Exchange Commission (2008).
An investment may be a security even if it is described using another label, such as a membership, package, business center, digital asset opportunity, passive-income program, or referral arrangement. The Supreme Court has held that an investment contract exists when there is:
- an investment of money;
- in a common enterprise;
- with an expectation of profits; and
- profits expected to come primarily from the efforts of others.
Thus, a crypto or online investment program may fall within securities regulation when participants contribute money and expect returns from the efforts of the platform operator, promoters, managers, or other persons.
Why Registration Matters
Registration is intended to provide investors with material information about the issuer, the investment, the risks, and the persons managing the enterprise. Registration of a company with the SEC is not, by itself, permission to solicit investments from the public or proof that an investment product is safe.
The Supreme Court has distinguished the authority to operate a business from the separate requirement to register securities offered to the public. An entity may hold a business registration or license and still violate securities laws by offering unregistered investment contracts. This distinction appears in Virata, et al. v. Ng Wee, et al. (2017).
Accordingly, a financial influencer should not rely solely on the fact that a promoted company has a certificate of incorporation, a business permit, or a social-media presence. Those facts do not establish that the specific investment product is registered or exempt.
When Does Promotion Become Regulated Activity?
General financial education is different from soliciting or selling an investment. The risk of regulatory liability increases when the influencer:
- identifies a particular investment product and urges the audience to buy or contribute money;
- provides a referral link, account number, payment instruction, or enrollment form;
- promises or strongly implies fixed, guaranteed, or unusually high returns;
- uses testimonials, income screenshots, or lifestyle claims to induce investments;
- receives commissions, referral fees, tokens, free interests, or other compensation;
- answers questions by giving individualized instructions to invest; or
- helps bring the investor and the issuer together to close the transaction.
The applicable legal characterization depends on the complete conduct, not merely on the influencer’s title or disclaimer. Calling oneself an “educator,” “affiliate,” “community leader,” or “information provider” does not necessarily prevent liability.
Can an Unregistered Influencer Give Binding Investment Advice?
An unregistered creator should not hold himself or herself out as authorized to provide binding investment recommendations, execute investment orders, or solicit investments for compensation. Depending on the activity, the person may be treated as a promoter, broker, dealer, salesperson, agent, or other participant subject to securities regulation.
In Securities and Exchange Commission v. Santos (2014), the Court recognized that a person may be liable for participating in the sale of unregistered securities even without being a signatory to the investment contracts or directly receiving the investors’ funds. Active solicitation, referral, and the provision of information intended to close a sale may be sufficient when the person’s conduct effectively brings about the transaction.
This principle is particularly relevant to social-media promotions. An influencer who directs followers to an investment platform, explains how to join, answers objections, and encourages payment may be doing more than merely expressing an opinion.
Does a Disclaimer Remove Liability?
A disclaimer such as “not financial advice,” “for educational purposes only,” or “invest at your own risk” is not automatically determinative. It may be relevant evidence, but it cannot defeat liability when the influencer’s actual conduct amounts to solicitation, misrepresentation, or participation in an unlawful sale.
The substance and overall presentation of the promotion matter. A post may be treated as a recommendation or solicitation when its message, links, calls to action, compensation arrangement, and surrounding communications encourage the audience to invest.
Prohibition on Misleading Investment Promotions
Act No. 3740 prohibits advertising that misrepresents the character or value of stocks, bonds, shares, or the properties or prospects of a firm or corporation. Its broad language covers representations made through prospectuses, handbills, billboards, pamphlets, circulars, and other forms of advertising.
Although the statute predates social media, misleading online promotional material may raise the same concerns when it falsely represents the value, safety, prospects, or expected returns of an investment. A creator should therefore avoid statements that suggest guaranteed profit, government approval, zero risk, assured liquidity, or an established track record when those statements cannot be substantiated.
Crypto Promotions and Investment Scams
Not every cryptocurrency transaction is automatically a security. The legal treatment depends on the nature of the product, the rights attached to it, the manner of distribution, and the expectation of profit from the efforts of others.
However, a crypto-related program may present securities-law concerns when it solicits funds from the public, pools participants’ money, promises returns, or depends on the managerial or promotional efforts of an operator. The label “crypto,” “token,” “staking,” “mining,” or “decentralized finance” does not by itself determine the legal result.
Influencers should also be cautious about promotions involving unregistered platforms, anonymous operators, guaranteed monthly returns, recruitment-based compensation, withdrawal restrictions, and pressure to act immediately. These features may indicate a need for further regulatory verification before any promotion is made.
Possible Liability of the Influencer
An influencer’s potential liability depends on the evidence and the person’s role. Possible consequences may include regulatory proceedings, cease-and-desist measures, administrative sanctions, civil claims for damages, and criminal prosecution where the elements of a criminal offense are established.
Where five or more persons form a syndicate to defraud the public through misappropriation of solicited funds, syndicated estafa under P.D. No. 1689 may also be implicated. In People of the Philippines v. Mateo, et al. (2017), the Supreme Court held that syndicated estafa may cover forms of estafa under Article 315 of the Revised Penal Code, including fraud involving funds solicited from the public.
The influencer’s absence from the company’s formal corporate records or investment contracts is not conclusive. The relevant inquiry includes the person’s acts, representations, communications, compensation, knowledge, and contribution to the solicitation or sale.
Common Scenarios
| Scenario | Legal concern |
|---|---|
| A creator explains how securities registration works without promoting a particular product. | Generally lower risk, provided the discussion is accurate and not a disguised solicitation. |
| A creator tells followers to deposit money into a platform promising fixed monthly returns. | Possible solicitation of an investment contract and possible participation in an unregistered securities offering. |
| A creator receives a commission for every referred investor. | Compensation and referral activity may support treatment as a participant in the sale or solicitation. |
| A creator republishes an issuer’s claim that profits are guaranteed. | Possible misleading advertising or misrepresentation, especially if the creator adopts or endorses the claim. |
| A creator merely discusses market news and clearly identifies risks. | Generally less likely to constitute a securities sale, although the full context remains relevant. |
Compliance Steps for Financial Influencers
- Verify the product. Check whether the issuer, platform, broker, dealer, or investment product is registered or otherwise authorized by the appropriate regulator.
- Identify compensation. Disclose commissions, referral fees, tokens, equity interests, free products, and other benefits connected with the promotion.
- Avoid guarantees. Do not promise profits, capital preservation, fixed returns, immediate withdrawals, or government protection unless the statement is legally and factually supportable.
- Separate education from solicitation. Do not combine general information with payment instructions, referral links, enrollment forms, or pressure to invest.
- Preserve records. Keep copies of scripts, posts, contracts, disclosures, chats, and due-diligence materials.
- Obtain legal review. A proposed campaign involving public solicitation, commissions, digital assets, or investment advice should be reviewed before publication.
Guidance for Investors
Investors should not treat popularity, follower count, celebrity status, or apparent wealth as proof that an investment is legitimate. Before sending money, verify the identity and authorization of the issuer and the person promoting the product.
Investors should also be cautious when a promoter refuses to explain the risks, discourages independent verification, demands immediate payment, or claims that the opportunity is available only to a limited group. Screenshots of profits and testimonials do not establish that the underlying investment is lawful or sustainable.
Conclusion
Financial influencers may discuss investments and cryptocurrency, but social-media promotion can become regulated conduct when it solicits funds, recommends a specific product, provides individualized instructions, or helps close a sale. An unregistered creator cannot avoid responsibility merely by using a disclaimer or describing the activity as education.
The safer approach is to verify registration and authorization, disclose compensation, avoid unsupported claims, distinguish education from solicitation, and obtain legal advice before promoting any investment or crypto-related product. The decisive issue is the influencer’s actual conduct and its effect on the investing public.
About Nicolas and De Vega Law Offices
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