The Cryptom Kardashian Case: When Celebrities Should Think Before Shilling a Cryptocurrency Tokamak
KimKardashian did a favors for the criptom industry. Such a high-profile example could cause other celebrities to think twice before shilling a token on social media.
The S.E.C. said Monday that she would pay a fine of $1 million, although she didn’t admit or deny the findings. She will give back $260,000, including her payment from the company with interest.
Regulators said that she provided instructions for potential investors to purchase Emax. That is a violation of the anti-touting provision in the securities laws.
This case reflects a much larger problem in the crypto industry: Celebrities are using their influence to promote cryptocurrencies, a notoriously complex and risky asset class, which can lead people to invest in coins or projects that they may not understand.
Two years ago the FTC sent warning letters to celebrities, like the recording artist Jordin Sparks, reminding them that they need to disclose their connections to the products they promote.
“It’s a way to signal to other influencers: if you’re thinking about dealing with crypto, think twice,” said Whitehead. “The SEC is also using her as an influencer – but to boost compliance with securities laws. It’s a smart way to get the attention of others.
The anti-touting provision of federal securities laws was found to have been broken by the reality show star. Kardashian agreed to the order without admitting or denying the SEC’s findings.
In a June 13, 2021 Instagram post Kardashian wrote, “Are you guys into crypto? This is not financial advice but sharing what my friends have said to me. She added different hashtags, including #ad, along with #emax and #disrupthistory, among others.
How Do You Know What I Know About the Internet Underground? Comments on the Securities and Cryptocurrency Laws in the Age of Crowdfunding
There are various laws related to advertisements for perfume, vacations, or anything else on the internet. But these are the securities laws,” he said.
Emily is an ex-policy advisor to the US State Department and writer/ editor at The Wall Street Journal. She is an author of a book called “Now I Know Who My Comrades Are: Voices From the Internet Underground.” The opinions in this commentary are her own. Read more opinion at CNN.
Cryptocurrency is a fast-moving industry, and regulators have yet to catch up. There are always new coins and projects without warnings about the risks of investing. The price of cryptocurrencies in general are more about sentiment than they are about fundamental value, so one could say they are mostly sentiment driven. Social media can be a powerful driver of prices. Several reports have attributed the changes in the price of the coins to Musk.
In such a fast-changing and confusing market, how do you distinguish winners from losers? It would be easy to see how a celebrity can have a big influence on a new investor.
“I do think people will be more careful now,” former SEC branch chief Lisa Braganca told me. “This is how the SEC speaks to the world. It has a very less impact when they make informational videos. It makes a lot less noise than when they bring an enforcement action.”
Critique of the Bored Ape Yacht Club: An NFT-inspired ethereum asset that’s not sold on the blockchain
The backlash started earlier this month, when a class-action suit was filed against celebrities, including Jimmy Fallon, Justin Bieber and Serena Williams for promoting Bored Ape Yacht Club NFTs.
NFTs are a crypto-related phenomenon that went mainstream, essentially transforming digital works of art and other collectibles into one-of-a-kind, verifiable assets that are easy to trade on the blockchain. The Bored Ape Yacht Club is a collection of 10,000 pieces of digital NFT art living on the ethereum (eth) blockchain.
In November, Brady and others were sued by an FTX investor for endorsing the platform, and then in December Brady and others were sued again for their support of FTX.
The CEO of FTX testified on Capitol Hill that investors in the company are unlikely to be able to recover their money. And people who poured money into Bored Ape NFTs are finding their investments aren’t worth what they paid for them, as the NFT market has imploded.
It is facing bankruptcy, with its former CEO being accused of carrying out one of the biggest financial frauds in US history.
The Sun on TRX, BTT, and Mock Suntron: A High-Cost, High-Fidelity Cryptanalysis
“Exploring #DeFi and already liking $JST, $SUN on $TRX. Super fast and 0 fee. Good job by Justin Suntron. The SEC said that the actress failed to tell them that it was a paid endorsement.
The celebrity was unaware of the requirement when contacted in March of 2022, according to the spokesman. She agreed to pay a fine to resolve the matter.”
Other celebrities that agreed to settle their charges include MicheleMason (also known as “Kendra Lust), Miles Parkscomm, Akon, and Ne-Yo.
They agreed to pay $30,000 in fines and $10,000 for the promotion, but Lindsay paid not one, but two, fines. Paul agreed to pay fines on top of his income.
The SEC also says Sun and the companies paid celebrities with vast social media followings to hype TRX and BTT and directed them not to publicly disclose their compensation.
Sun encouraged users to recruit others to its Telegram and Discord channels and use its social media platforms to promote its products, according to the SEC. Sun’s companies would reward their employees with CRYPTO for doing so. Additionally, the SEC claims Sun “directed the manipulative wash trading of TRX to create the artificial appearance of legitimate investor interest and keep TRX’s price afloat,” while his team “engaged in hundreds of thousands of TRX wash trades between accounts that Sun ultimately controlled.”
NPR’s First Call for Comments on “The Bose-Einstein Condensation of Dark Matter in Supergravity and Cosmology”
When NPR reached out to representatives for each celebrity with a request for comment, they didn’t immediately hear back from seven of them. A representative for Jake Paul wouldn’t comment.