By Chris Matthews
Gary Gensler is adamant: The Securities and Exchange Commission’s Monday settlement with businesswoman and social-media star Kim Kardashian is in keeping with decades of tradition and legal precedent at the agency.
Kardashian agreed to pay $1.26 million to settle charges that she unlawfully promoted EthereumMax tokens on Instagram /zigman2/quotes/205064656/composite META -0.74% , a platform where she has 331 million followers. Though the post contained the hashtag ‘#ad’ at the bottom, the social-media influencer did not disclose that she was paid $250,000 by the token’s issuers to promote it.
“In the securities laws you have to disclose not only that you’re getting paid but the amount and nature” of the payment, Gensler told CNBC Monday morning.
Kardashian’s case, therefore, differs from celebrities who are touting cryptocurrencies like bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.20% or ethereum /zigman2/quotes/108573964/realtime ETHUSD +0.59% without being paid to do so, even if they own a large stake in that token and would benefit from its appreciation.
Her situation also differs from celebrities like Matt Damon and Larry David, who were recently featured in a high-profile ad campaigns for the crypto platforms Crypto.com and FTX.
But the SEC’s latest enforcement action isn’t particularly unique: Celebrities ranging from boxer Floyd Mayweather to musician DJ Khal ed and actor Steven Seagal have been fined for unlawfully touting crypto securities, Gensler said.
“We’ve brought these cases [for] decades,” Gensler said, adding that “with regard to crypto” there’s been a significant number of violations over the past five years in particular.
The SEC has also been signaling its interest in these types of cases lately, with Gensler warning investors to be wary of celebrity endorsements, be they for crypto tokens or for meme stocks.
In May, the SEC’s investor advocacy office launched a series of ads warning Americans not to trust celebrities who tout crypto or other highly speculative investments, with the tagline, “Investing is not a game, always do your research before making an investment decision.”
The ads were criticized by some investors on social media for what they saw as a condescending tone.
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