Double Standard Securities Law for Celebrity Crypto Endorsement

On October 3, 2022 the U.S. The Securities & Exchange Commission announced charges against Kim Kardashian for promoting a cryptocurrency without specifying the paid promotion. Later on, the actress agreed to pay $1.26 Million for settlement.

On the other hand, Matt Damon and Larry David got unpunished for the same sake. Somewhere, it seems that double standard is a function of a subtle yet crucial distinction in securities law.

Unlawful Touting Crypto Security By Kim Kardashian

This recent happening shows the double standard security laws for Celebrities. It can be seen that the crypto endorsements by celebrities attracted millions of Americans into the crypto market at the beginning of this year, just before the crypto prices began to crash.

As some of the TV ads, that cost nearly to $6 Million each, broadcasted thousands of times and thus reached millions of viewers. And as of now, nearly everybody who bought crypto at those levels ended up losing their money.

The recently highlighted post from Kardashian’s Instagram page was for a coin, that almost no one had heard of. This may have caused losses for anybody who purchased that coin after seeing that ad on her profile. But the number of those people — and the total aggregate losses — were not huge as compared to the industrial-scale ad campaigns from the big crypto platforms.

The SEC Chair Response

After announcing the Kardashian settlement, Gary Gensler, the SEC Chair, strongly pointed out the celebrity endorsements more generally. He 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. We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”

He also pointed out that “Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”

However, the arrogant act of Gensler legally says that it’s okay for the celebrities and influencers to endorse investment opportunities that may include crypto investments. But Kardashian crossed the border as she endorsed crypto asset security.

The level of the crypto advertising boom was the 2022 Super Bowl, at which the popular firms like FTX and Crypto.com spent untold millions advertising their websites as a place to buy cryptocurrencies from their platforms.

While, it must be noted that the Instagram post of Kardashian was relatively low-budget 2021, as she was only paid $250,000 for it to advertise an actual coin, EthereumMax, that the SEC has found out qualifies as a security. This further brings it under SEC jurisdiction, which is more rigid than the FTC regulations governing most advertising.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing