Emojis Can Be Financial Advice, Says Judge

A bizarre court ruling means that emojis can legally count as financial advice. It's a side effect of the latest case involving regulation of digital assets.

The case centers on non fungible tokens, also known as NFTs. In short, an NFT is something that only exists digitally, can be bought and sold, and the ownership of which is recorded on a public ledger called a blockchain - similar to how bitcoin operates.

In this case, the NFTs were a limited edition collection of digital clips of famous basketball moments. The effect was much the same as owning a rare trading basketball card except without actually being able to touch it.

As with physical trading cards, some people buy NFTs for the pleasure of ownership, but many treat them as an investment in the belief that they will be able to sell them at a profit later on.

NFTs May Be Securities

The problem comes if NFTs are classed as securities. If that's the case, the organization that first "creates" and sells the NFT needs to make detailed financial disclosures to potential investors in the same way as the stock market.

The plaintiffs in the case say the company that issued the NFTs in question did not make such disclosures. They say such disclosures would have revealed methods the company used to keep the apparent value of the NFTs high and that this revelation would have affected their decision to buy.

The company which created the NFTs says they should not be classed as investments and thus they didn't have to make the disclosures. They say the case should be immediately dismissed.

The plaintiffs argue that the company used emojis such as a rocket ship, a stock chart and a bag of money to describe their NFTs. They say this was a clear indication that the company was providing financial advice and indicating that buyers could expect the "value" of the NFTs to rise.

Emojis Taken Literally

The judge has agreed with that, ruling that even though the posts did not include the word "profit", the emojis "objectively mean one thing: a financial return on investment." (Source: crainsnewyork.com)

The ruling doesn't mean the court has decided either way on whether the NFTs are indeed securities. Instead, it means there's enough of an argument that the case should proceed to a full trial rather than be thrown out. (Source: theregister.com)

What's Your Opinion?

Should NFT creator-sellers be subject to disclosure rules? Do you agree an emoji can count as giving financial advice? Is any of this a good use of the court system's time and resources?