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- SEC fines Kim Kardashian $1.26 million for violating anti-nuisance rules
- Kardashian agreed to pay a $1 million fine and forfeit $250,000 in ad fees (plus interest).
- In the past, Kardashian has faced controversy over promotional posts, including slimming and bodybuilding products.
- The SEC's decision reminds investors to be wary of celebrity advice, especially when it comes to personal gain.
When you think of Kim Kardashian, cryptocurrency may not be your first reference. Celebrities are known for their eponymous TV shows, luxurious lifestyles, and popular brands.
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It trades until Monday, that is.
A well-known businesswoman was criticized by the SEC this week for publishing an incorrectly published advertisement last year about the origin of the EthereumMax cryptocurrency. He agreed to pay a fine of more than $1.26 million to settle the charges without pleading guilty.
Kardashian is one of dozens of celebrities who have joined cryptocurrency in 2021. The sector is growing as advertisements and ICOs fly right and left causing an explosion. Until, of course, the cryptocurrency market shrunk, leaving thousands of investors dry and rich and a few celebrities hot.
Explain coding problems to Kim Kardashian
In June last year, A. Kardashian posted an advertisement for EthereumMax, a crypto asset, which was seen by her almost 250 million subscribers. The announcement reads:
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"Do you like crypto??? This is not financial advice, but what my friend said about Ethereum MAX tokens! A few minutes ago, Ethereum MAX burned 400,000,000,000,000 tokens - literally 50% of its management wallet with e-Max returns community. #EMAX #DISRUPTHISTORY #ETHEREUMMAX #WTFEMAX #GIOPEMAXETHEREUMMAX #AD"
Under the ad in large print is written "Miss". Kardashian called on investors to "swipe up" to join the E-Max community. He also includes an intro video saying he has a "big announcement" he wants to share.
Although Kim Kardashian's messages about crypto included "#ad" at the bottom, the Securities and Exchange Commission decided that third-party endorsements were not in line with investment promotion rules. According to an SEC press release, the agency found that he “violated federal securities laws prohibiting recommendations” by “promoting the security of crypto assets on social media… without disclosing how much he paid for the promotion.”
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To settle her complaint, Kardashian paid a $1.26 million fine, including a forfeiture of $250,000 she received from EthereumMax (plus interest). As part of the settlement, he also agreed to refrain from promoting investment in crypto assets for three years.
Kardashian's lawyer said in a statement that Kardashian is "glad to have this matter resolved," adding that she has "fully cooperated with the Securities and Exchange Commission from the very beginning." The statement concluded by saying that the deal would allow him to "continue his various commercial activities."
Make an example of shame
According to industry experts, Kim Kardashian's cryptocurrency fine could be more than just a breach of security law. It's also about setting an example of shame.
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Charles Whitehead, a professor at Cornell Law School, called the SEC's allegations of celebrity endorsement "groundbreaking." "It's a way to point out to other influencers: if you're thinking about working with crypto, think twice. The SEC is using it as an influencer, but to increase compliance with securities laws. [It's] a way to bring attention to a smart challenge," Whitehead said. So that others don't."
This information was shared by SEC President Gary Gensler. “This case is a reminder that when a celebrity or influencer endorses an investment opportunity, including crypto asset securities, it does not mean that the investment product is suitable for all investors,” he said. "Mr. Kardashian's case is also a reminder to celebrities and others that the law requires them to publicly disclose the timing and amount of their payments to promote their investments in securities."
Gurbir Grewal, Director of Enforcement at the SEC, added: “Federal securities laws make it clear that [an individual] who promotes the security of crypto assets must disclose the nature, source, and amount of compensation they receive in exchange for such promotion. the right to know whether security promotion is impartial.” Ada and Mrs. Kardashian did not disclose this information."
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Kim Kardashian's coding problems aren't unique
The Securities and Exchange Commission's decision was not the first time that Kim Kardashian's cryptocurrency has caused trouble. And this is not the first time for this particular post.
In January, Kardashian, along with boxer Floyd Mayweather Jr., soccer player Antonio Brown, and basketball player Paul Pierce, were named defendants in a lawsuit brought by EthereumMax investors. The lawsuit alleges that the defendants conspired to "deceptively promote and sell" the E-Max brand in a "pump and dump scheme."
EthereumMax denied the accusations. Since the token peaked in June 2021 - right after the announcement of EthereumMax - the coin has fallen over 99% and failed to catch on in the crypto market.
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The case is still ongoing.
Trouble on the other side
Kardashian is not the first celebrity to pay a fine to the Securities and Exchange Commission (SEC) for using her influence to promote risky crypto assets.
In 2018, Floyd Mayweather Jr. And DJ Khaled is accused of promoting the initial coin offering without explaining the reasons for their reward. Mayweather Jr. was fined $600,000 in $300,000 damages and DJ Khaled paid over $150,000 in $50,000 promotional expenses.
In 2020, actor Steven Seagal paid over $300,000 in a similar lawsuit. “Sir. Seagal was not involved in the creation of the cryptocurrency in question,” his representative said at the time. “For him, it was just a case when someone paid a celebrity to use his image to promote a product.” promotion of investments within three years.
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Some celebrity endorsements are safe - for now
Not all celebrities violate cryptocurrency disclosure laws. However, in some cases, they may have to disclose more information about the transaction right away.
For example, actresses Reese Witherspoon and Gwyneth Paltrow have joined or promoted crypto assets or projects with due attention.
Meanwhile, Matt Damon, Tom Brady, and Larry David have promoted cryptocurrency exchanges, not assets, in recent years. Since cryptocurrency exchanges are not registered with the SEC as a stock exchange, these transactions are not currently within the remit of the SEC.
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However, SEC Chairman Gensler has often stated that cryptocurrency exchanges should register with the SEC as a stock exchange. He believes that “these crypto platforms play the same role as traditionally regulated exchanges. Therefore, investors should be protected in the same way.” He also believes that crypto assets, including coins and some NFTs, are subject to current securities laws.
Cryptocurrency investors often get nervous when regulators mention the application of rationing to the industry. After all, as an anonymous, decentralized internet asset, cryptocurrencies are designed to protect privacy by keeping governments out of the hands.
Historically, cryptocurrency exchanges have been inherently opaque, profiting operators without oversight or accountability. Many exchanges have been accused of illegal activity or may be illegal under other circumstances, such as money laundering or improper freezing of customer accounts.
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For this reason, many regulators believe that there are grounds for enforcing the law. SEC registration will require technology that meets audit requirements and adherence to strict rules to prevent market manipulation and protect vulnerable investors.
To avoid possible regulation, many exchanges have been set up overseas or US clients have been turned away. But the boycott of the lucrative US market had financial implications. In an effort to please the Securities and Exchange Commission, some exchanges, such as Coinbase, made acquisitions without being registered as registered brokers and dealers in the United States.
Confidence and responsibility in investments
In 2019, Kardashian said in an interview that the endorsement became "a little more personal" for her. He added that he would consider the financial benefits of the job, such as paying statutory fees that inmates cannot afford, "even though the position may not make sense to him."
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However, that hasn't stopped Kardashian from making a fuss over the years in many of her sponsored publications, including weight loss and bodybuilding products. Families cut ties with expensive prepaid debit cards with their photos. Former Connecticut Attorney General Richard Blumenthal said the family's "luxurious and luxurious life" helped the bank target low-income youth.
Kardashian's coding mistakes, as well as the advertising's persistence in general, raises questions of trust and responsibility regarding celebrity endorsements. Even when done legally and transparently, making financial decisions based on recommendations from unknown strangers has dire consequences.
Before considering celebrity endorsements for any financial purpose, ask yourself two important questions:
What's wrong with me?
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Beyond the legality and ethics of promotion, public promotion does not take into account individual health or financial circumstances. Securities and Exchange Commission Chairman Gensler seems to view celebrity sponsorship in the same light.
In a video posted to Twitter, Gensler noted that "celebrities sometimes endorse investment opportunities such as crypto tokens or special purpose entities. However, celebrity endorsement does not mean an investment product is right for you or even obviously legal." "
In other words, before you even consider celebrity endorsements, ask yourself if what they're promoting fits your situation. For example, if you are risk averse, buying crypto tokens may be outside of your acceptable risk.
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Assuming the product passed the risk test, also consider whether the offer is valid. Don't be afraid to do research on key issues, starting with the salesperson.
Who can be trusted?
Gensler's Twitter video also reminds investors that "celebrity or influencer incentives don't always align with yours. We can enjoy watching celebrities play on the basketball court, star in a reality show or movie, or perform in front of a large crowd in a stadium show. However, we should not confuse these skills with other skills needed to provide good investment advice.”
In other words: when will anyone - especially those whose money is at stake, including consumers and investors - trust government statistics?
We can think of faith as incremental proof that someone is always worthy, right, or on our side. They look different in different situations.
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For example, if you have a financial adviser, you can be sure that he is qualified based on his authority. Whether or not you trust them to work for your specific interests, they only work on a fee or commission basis and may vary depending on their track record in the industry.
Or think of someone like Warren Buffett. আর্থিক,,, -
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