Kim Kardashian Fined $1M for EthereumMax Crypto Campaign
Celebrity Kim Kardashian agreed to pay $1.26 million to not disclose a $250,000 payment to send a crypto token called EthereumMax (EMAX USD).
The settlement, disclosed by the US Securities and Exchange Commission (SEC), includes a $1 million fine plus a $260,000 waiver of her payment (including interest).
It’s the latest step in an SEC crackdown on crypto, distinguishing between celebrity endorsements of exchanges and specific coins.
Kim Kardashian Crypto: What’s Happening?
EthereumMax began trading in 2020 and has never been worth more than a fraction of a cent. It recently traded at $0.000000004233.
Investors filed a class action lawsuit in January over Kardashian’s endorsement, along with boxer Floyd Mayweather, who took EthereumMax tokens as payment for tickets to one of his fights. Kardashian tried to be cagey in her own support, writing on Instagram: “This is not financial advice, but sharing what my friends just told me.”
The SEC has been campaigning against what it calls “pump and dump” crypto schemes. Last week it filed suit against two firms that said they had gold bars backing a coin called Dignity (DIG-USD). Crypto executives have said the agency is “trying to destroy” their industry with lawsuits calling coins unregistered securities.
But the agency has not had things its own way. Courts have sometimes ruled that the coins are not securities, taking them out of the SEC’s jurisdiction. The Commodities Futures Trading Commission (CFTC) has also sought to be the crypto regulator, which industry observers consider bullish for the sector.
Several exchanges ran ads during the Super Bowl, featuring celebrity players such as LeBron James, Larry David and Matt Damon.
The SEC has been investigating celebrity crypto endorsements for five years, taking action against those endorsing specific coins, but no action against those endorsing exchanges.
What happens afterwards?
Celebrities go where the money is, and with most cryptocurrencies selling for a fraction of their price by the start of 2022, they’re going elsewhere.
The rule should be simple. You can pitch Coca Cola (SNEEZE:QUEUE), you can pitch a stock market, but you can’t pitch Coca-Cola shares.
As of the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Guidelines for publication.
