The last, excited years of the web economy teach us two things above all: learn quickly to distinguish a free endorsement from a paid one and, if you handle cryptocurrencies, watch out for the game of three cards. The latest adventure of Kim Kardashian – a model and American influencer who already starred with her family in the famous reality show Keeping up with the Kardashians – confirms the rule: the lady pays $ 1.26 million to the SEC for promoting tokens without reporting having received $ 250,000. The facts date back to 2021, when Kardashian launched Emax, a cryptocurrency offered by EthereumMax, on her Instagram account.
The background of Mayweather and Dj Khaled
Kardashian has neither admitted nor denied the regulator’s allegations, however agreeing not to advertise any digital assets for the next three years and to cooperate with the ongoing investigation. The SEC has repeatedly pointed out in recent years that celebrities advertising cryptocurrencies considered securities need to make it clear to investors if they are paid for their support. In 2018, the regulator had, for example, fined boxer Floyd Mayweather and music producer DJ Khaled for failing to disclose payments received to advertise certain token launches. “This case reminds us that when celebrities or influencers advocate for investment opportunities, including cryptocurrency stocks, it doesn’t mean that these investment products are suitable for all investors,” SEC chairman Gary Gensler said in a statement. “We therefore urge investors to consider the potential risks and opportunities of an investment in light of their financial objectives.”
The SEC accusation: “unclear” announcement
Although Kardashian had put “#AD” at the bottom of the 2021 post, she should have specified that she had received $ 250,000 for the ad. The main Wall Street regulator claims that many virtual tokens are full-fledged securities and fall under its jurisdiction. To determine whether something is a security, the SEC applies a legal test that results from a 1946 Supreme Court decision. Under this criterion, an asset can be supervised by the SEC when investors pay money with the intention to profit.
The biggest crypto ad in history
The UK’s financial regulator also saw a squeeze on cryptocurrency ads by influencers last year. Charles Randell, former president of the Financial Conduct Authority, said that the operation carried out by Kardashian on Instagram, considering its 331 million followers, “may have been the financial promotion with the largest audience in history”. In short: increasingly difficult to keep up with the Kardashians.