Kim Kardashian Fined Over $1M By the SEC For Emax Promotion
What happens when you mix celebrities, crypto, and absorbent amounts of money? Well if 2021 has shown us anything, often you get a pump-and-dump scheme where an asset is inflated based on the greater fool theory - leaving everyday investors to lose nearly all of their funds. In one of the largest and more recent pump-and-dump scandals, America’s biggest reality TV star, Kim Kardashian, promoted the token “Ethereum MAX” by saying -
“This is not financial advice but sharing what my friends just told me about the Ethereum max token! A few minutes ago Ethereum max burned 500 trillion tokens- literally, 50% of their admin wallet giving back to the entire E-MAX community.”
What the celebrity chose not to disclose, however, was the $250,000 payment given to her by the Ethereum Max creators to promote the token. According to SEC defense attorney Lisa Braganca,
“The chairman [Gary Gensler] is absolutely right to say there is a specific statute that addresses and requires that there be disclosure, not just of a paid promotion, but the amount that someone either has been paid or expects to be paid,”
While Kardashian refused to admit any wrongdoing in the case, she did agree to comply with the investigation, pay her $1.26M fine, as well as not promote any cryptocurrency projects for three years.
With a YouTube channel last active over 6 months ago, a blog that hasn’t released a story since August, and a price that is down over 99% from its peak, it’s safe to say that Ethereum Max’s early performance was purely driven off hype and exposure rather than fundamentals. Unfortunately, many of the token promoters posted advertisements that portrayed Emax as being a game-changer in the crypto space, taking advantage of their following and rewarding that loyalty with a -99% return on their investment. Kim Kardashian isn’t the only celebrity to face fines from the SEC over promoting cryptocurrency projects. As crypto became mainstream in 2021, we’ve seen people such as Floyd Mayweather, DJ Khaled, and Steven Seagal being fined for unlawfully promoting cryptocurrency projects, nearly all of which have led to a loss for their audience.
The latest fine brought against Kim Kardashian gave the SEC one of the best opportunities possible to raise awareness about illegal securities promotion. While countless fines have been placed on smaller celebrities, nothing has come close to leveraging Kim Kardashian’s 331M Instagram followers. In an interview with “First Mover” and Lisa Braganca, Braganca states -
“The SEC is always looking for a way to get the message out to the public, and when somebody with the kind of following that Kim Kardashian has makes a blunder like this, that’s a layup for the SEC,”