Keeping up with the SEC

Kim Kardashian, of KUWTK and online fame, agreed to pay $1.26 million to settle charges of promoting a cryptocurrency without the proper disclosures, the SEC announced yesterday morning.

By mid-morning, the story was on the front page of more than ten publications we regularly check. Which begs the question: did Kris Jenner orchestrate this, too?🤔

🪙📱 All jokes aside… The SEC’s charges stem from a June 2021 Instagram story Kardashian shared to her then-225 million followers. In it, the billionaire influencer and reality-star touted EMAX tokens, a coin minted by crypto company EthereumMax – but failed to properly disclose she was paid $250,000 to promote the project (which dropped ~95% soon after her post).

• Under US law, people promoting a certain stock or crypto security need to disclose not only that they are getting paid to do so, but also the amount, source, and nature of those payments. (So just putting “#ad” at the end of the story – like Kim K. did – isn’t sufficient in this case.)
• Kardashian didn’t admit or deny wrongdoing as part of the settlement.

🚗 Driving the fine: "This was really to protect the investing public… that's at the core of what this is about," SEC Chair Gary Gensler told CNBC. Translation: the regulatory agency wants to send a message. Because as experienced deal-seekers and HODL’ers know all too well, influencers and crypto scams aren’t exactly strangers.

📉 Zoom out: Like many other areas of the economy, crypto hasn’t been doing so hot. Its overall market cap has dropped ~70% over the past year or so, from a peak of $3.2 trillion in November 2021 to less than $1 trillion currently.