Requires certain disclosures in advertisements involving virtual tokens

Showing the cosponsors who are on Agora, A to Z. The official record may list more.

• Democratic1

Shown in neutral colors by design; Agora is non-partisan.

◆ The sponsor's argument

Why Leroy Comrie says this is needed

There has been a flood of new, unregulated virtual tokens that resemble securities and that have been placed on the open market for unwitting investors to invest large sums of money into in the hopes of a signif- icant price increase. Although most of these tokens are advertised as investment opportunities, many people invest in them without fully understanding what they are investing in. The majority of the time, these security tokens are created by small groups of anonymous individ- uals who have complete control over the price of the security tokens, either through their ability to cease technical support or to sell a large portion of the supply all at once to make substantial profits. The use of public figures to promote a security token is a common strat- egy used to garner interest in the security token. These public figures are frequently compensated in the same security tokens created by the developers, in the hopes that their promotion of the security token will cause the price to increase rapidly - sometimes by 10,0001 or more in a single day - and net the advertiser a large sum of money. Users are unaware of the amount of money paid to the advertiser, even when they are compensated with other forms of consideration such as money, leaving them with very little information about why the advertiser is advertis- ing the security token. Advertisers of securities, such as stocks, must already disclose the amount of consideration they were paid under federal anti-touting laws, and it is time for virtual tokens that act as securities to be subjected to the same rules. It is not enough for security token advertisers to state that their advertisement is in fact an advertisement to safeguard investors. Instead, to protect investors from being misled by security token adver- tisers, it is critical for such advertisers to disclose the amount they were paid, whether their purchase will directly result in the advertiser making money on the security token, and the number of security tokens they received. If prospective investors learn that an advertiser was compensated in the form of security tokens or other forms of compen- sation for their advertisement, they may or may not be hesitant to put their hard-earned money into such an investment. Regardless of the decision they end up making, it is every investor's right to have the information necessary to make that decision in the first place.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.