Kim Kardashian just got fined More than a million dollars In order to promote cryptocurrency online – but it’s not the only celebrity with ties to it crypto world.
For the many other A-leaders who have thrown their weight behind cryptocurrencies, crypto companies and non-fungible tokens, or NFTs, Kardashian’s $1.26 million settlement with the Securities and Exchange Commission could mark a turning point in how Hollywood’s biggest names are thinking about this. The online economy is relatively unregulated.
“The SEC aims to take enforcement action … that will garner widespread attention and influence the behavior of market participants in the future,” said Philip Mostakis, an advisor at the law firm Seward & Kessel. “Of course, an action against Kim Kardashian is perfect for these purposes.”
In short, follow up via email, the Securities and Exchange Commission (SEC) hopes that Kardashian – a media personality both online and off – is an “influencer of a different kind.”
Kardashian has been fined for not revealing that she paid for an Instagram post promoting the EthereumMax cryptocurrency, but she is not the first big name to land in regulatory hot waters over crypto deals.
It was Floyd Mayweather Jr. and DJ Khaled charged in 2018 for not disclosing that they received funds to promote several crypto investments, and in 2020, The same It happened to Steven Seagal.
According to a former SEC official, A warning In terms of celebrity-endorsed cryptocurrencies that the agency introduced in 2017, it was largely driven by Mayweather, Jamie Foxx and Paris Hilton promoting crypto assets.
As such, the former official said, the Kardashian fine does not necessarily indicate a change in direction from the Securities and Exchange Commission, but rather indicates a stronger position than the one taken by the agency five years ago.
“By bringing this case, [the SEC] He basically said, “Look, you’ve all been given fair warning. The former official, who requested anonymity to protect his relationship with his former colleagues, told The Times.”
It can be hard to talk about cryptocurrencies without mentioning the sometimes strange overlap between the relatively niche financial technology and the entertainment industry. In January, Hilton speak with Late Night TV presenter Jimmy Fallon talks about the anthropomorphic monkey symbols they both have. Less than a month later, notable names appeared including Larry David and LeBron James Starred in Cryptocurrency Ads during the Super Bowl. Matt Damon promoted investing in cryptocurrency as a business world-class courageAnd last year, crypto company MoonPay made an inaccurate cameo in a file video song Starring Post Malone Week.
There are still many questions On exactly why so many celebrities jumped on the crypto-hype train — and what financial incentives they might have for doing so.
With the entry into the cryptocurrency market period prolonged contraction – Some celebrities, including Fallon, have Removal NFTs from their Twitter profile pictures – The Kardashian fine indicates that the organizers, at least, are still watching the space intently.
Mike Castiglione, director of digital asset regulatory affairs at regulatory compliance firm Eventus, says via email. “This week’s enforcement action means that celebrities, or anyone else, should consider whether there could be a perception of withholding information when they do crypto sponsorship deals.”
Castiglione, whose company counts several cryptocurrency exchanges among its clients, said that celebrity endorsements “which are done openly and transparently” can make crypto assets more credible by linking them to the reputation of a public figure. But he added that it “can also be abused in pump and dump schemes” just as with other types of assets.
This is not the first time that those on the first list have come under regulatory scrutiny due to their crypto leanings.
“The Securities and Exchange Commission (SEC) has been going after other celebrities for promoting tokens that the SEC believes are securities for a while,” attorney Jason Gottlieb, Morrison Cohen’s partner and chief of white-collar and regulatory enforcement, said in an email. right Now”. ‘The new point in [Kardashian] The compromise is that the token in question is classified as security” — although he added, “No action has been taken against this discovered token.”
The issue can also be a sign of more systemic issues.
Rep. Brad Sherman (Democrat of Northridge), possibly Congress crypto skepticsShe described Kardashian’s failure to report as a “clear violation” of the SEC law, but said her high profile promotion of cryptocurrency also hints at the larger business of using influencers to inflate crypto prices.
“The fact that you get paid to promote it means there is a constant business that is raising prices,” Sherman said, adding that he wants higher fines and not just on the Kardashians. “I think Kardashian is either a component or lives outside my area, so I wish her well,” he said. “But in this case, you should have gotten better legal advice.”
Times staff writer Freddy Brewster contributed to this report.