The world of cryptocurrency was rocked today when the U.S. Securities and Exchange Commission charged influencer Kim Kardashian a $1.26 million fine, for promoting a token that turned out to be a scam.
Last year, Kardashian took to Instagram to espouse the cryptocurrency EthereumMax, publishing a post asking “"Are you guys into crypto???? This is not financial advice but sharing what my friends just told me about the Ethereum Max token!"” and adding "A few minutes ago Ethereum Max burned 400 trillion tokens -- literally 50% of their admin wallet, giving back to the entire E-Max community. Swipe up to join the E-Max community,"
The SEC charged the influencer with "touting on social media a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion," according to a press release, as she had reportedly been paid $250,000 for the post.
Back in January, she was named in a lawsuit alongside professional athletes Floyd Mayweather and Paul Pierce for allegedly scamming their followers to buy EthereumMax.
The lawsuit, as TheStreet's Luc Olinga previously noted, “said that while regular investors bought Emax coins, the defendants were offloading their own assets in exchange for profits in what is known in Wall Street circles as a pump-and-dump scheme.”
Kardashian neither admitted to nor denied the regulator’s findings, the SEC said.
"This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it doesn’t mean that those investment products are right for all investors," SEC Chairman Gary Gensler said in a statement.
Celebrities Face Backlash for Cryptocurrency Endorsements
Kardashian is reportedly worth $1.8 billion, so this fine isn’t going to set her back too much. Still, it’s one of the most high-profile punishments related to crypto that the SEC has handed out.
It might also be looked upon in the future as another turning point in the cultural standing of cryptocurrencies.
This year’s fall in crypto prices has brought on talk of a “crypto winter” after the market again fell below $1 trillion. It might be too soon to say if crypto is “over,” but it does seem fair to say that a good deal of the public has become very suspicious of the value of tokens like bitcoin and has also become very wary of celebrities endorsing them as investments.
Earlier this year Twitter (TWTR) took Oscar-winner Matt Damon to the proverbial woodshed for his bitcoin advertisement, which ran during the Superbowl. In addition to just being wildly overblown (the ad equates purchasing bitcoin as an accomplishment equivalent to going to space), Damon was blasted for encouraging people to invest in a market that could be considered volatile and unpredictable at best, and at worst is viewed by many as a Ponzi scheme.
The thrust of people’s ire is the belief that many celebrities do not do their research and do not really understand the risks that come with investing in crypto, and that they are encouraging people who, say, are hoping to find a way to pay off their college loans or put away enough for a down payment on a mortgage to take a chance that they really shouldn’t be taking.
But Damon isn’t alone, as public figures ranging from Ashton Kutcher to Gwyneth Paltrow to Tom Brady have also come under fire. The actor Ben McKenzie, best known to old millennials for playing Ryan Atwood on “The O.C.,” has a side hustle as an author and critic who takes celebrities to task for endorsing cryptocurrencies without understanding their volatile nature. McKenzie recently asked Reese Witherspoon to stop hyping Crypto.
What is Twitter Saying About All of This?
Cryptocurrency is a topic that a lot of people have strong feelings about on both sides, with passionate defenders insisting its an exciting market that can help people achieve their dreams, and critics insisting that it's just a bunch of hot air.
The ongoing cultural prominence of Kim Kardashian is also a topic that tends to suck all the air out of the room. Many people deride her for being massively famous despite having, in their view, no discernible talent. She also has legions of supporters that respect the way she rebounded from the embarrassment of a leaked sex tape to build an empire through hustle and the power of social media, and they also appreciate the frothy drama of her reality series "Keeping Up With the Kardashians."
So let's just say opinions are all over the place on Twitter. There's plenty of people drinking a deep cup of schadenfreude, but there's also some defenders willing to stick up for her.
Also, SEC Chairperson Gary Gensler took to Twitter to flex.
Crypto haters got jokes.
Some people wonder if this marks a turning point, or if it's just a slap on the wrist that doesn't mean anything.
But still, she has her defenders, from people who think the SEC probably has better things to do to people who think she didn't do anything wrong.
