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After the SEC Raps Kim Kardashian, Here’s Every Celeb Who’s Been Fined for Shilling Cryptos
There’s something about crypto and celebrities. Not only do these two words obviously begin with the same letter, but they both represent domains where image can overpower intelligence, and where the mere presence of social status is enough to convince otherwise sane people to abandon their own better judgment.
More simply, crypto and celebrities go together on a practical level: companies in the sector often pay celebrities to appear in their commercials, while even a few prominent celebrities are known to dabble in cryptocurrency investment. However, this past week, an especially famous celebrity by the name of Kim Kardashian was fined $1.26 million by the SEC for promoting the EthereumMax cryptocurrency on her Instagram account, without notifying her followers that she’d been paid to do so.
Karashian isn’t the first celebrity to have done this, with a handful of other notable figures also being rapped by the SEC and other agencies for undisclosed crypto shilling. And what all these episodes remind us is that, if you are going to invest in the cryptocurrency market, you should really do your own research.
Kim Kardashian Joins the List of Celebrities Fined for Shilling Cryptos
According to the SEC press release announcing the $1.26 million fine, Kim Kardashian was guilty of “touting on social media a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion.”
Specifically, Kardashian received a payment of $250,000 to publish an Instagram post about EthereumMax (EMAX), which she did so in May 2021. As pictured below, her post contained a link to the EthereumMax website, while another post published around the same time also celebrated how EthereumMax had completed a token burn.
Source: Instagram
Funnily enough, some websites actually suspected that Kardashian’s Instagram account might have been hacked, such was the incongruity of one of the world’s most famous celebrities name-dropping such a lowly cryptocurrency (EMAX is currently ranked the 5,376th-biggest token in the market by CoinMarketCap).
Regardless, Kardashian’s foray into the world of cryptocurrency promptly saw EMAX pump. From $0.000000000735496 on May 26, 2021 (the day of the posts), it jumped to an all-time high of $0.000000597636 by May 31, representing an increase of 81,156%!
EMAX’s price history for the duration of its existence. Source: CoinGecko
In other words, Kardashian’s paid shilling of EMAX was likely part of a plan to manipulate the altcoin’s price via a pump and dump, seeing as how it’s now down by 99% since its ATH from May 2021. Indeed, looking at EMAX’s volume chart alone, it is pretty much a dead coin now.
Summarizing the SEC’s view on the episode, chairman Gary Gensler had the following to say, with his remarks serving as an understatement of the impact Kardashian’s shilling likely had on any unfortunate person who bought EMAX at the top:
“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.”
The List of Celebrities Fined for Unlawfully Promoting Cryptocurrencies
Almost needless to say, Kardashian wasn’t the first celebrity to get their hands dirty in this way. Here’s the rundown of other celebrities who have also been fined by the SEC for not disclosing that they’ve been paid to talk about a cryptocurrency.
Steven Seagal
In February 2020, the SEC charged actor/tough guy Steven Seagal for “failing to disclose payments he received for promoting an investment in an initial coin offering (ICO) conducted by Bitcoiin2Gen (B2G).”
Seagal agreed to pay a $157,000 fine “without admitting or denying the SEC’s findings,” while also agreeing not to promote any cryptocurrency for three years (somethign which Kardashian has also done). However, as of August 2021, the actor hasn’t paid the fine, having moved to Moscow and even joined a pro-Kremlin party in May of the same year. Putin had already made him a Russian citizen in 2016.
Floyd Mayweather and DJ Khaled
In November 2018, former undisputed boxing champion Floyd Mayweather was hit with a fine of $614,775 by the SEC. The SEC issued this fine along with a smaller penalty for music producer DJ Khaled, who together with Mayweather had promoted three separate ICOs, including one from Centra Tech.
Mayweather had reportedly described the Centra Tech ICO as a “game changer” on his social media accounts (without informing anyone that he had been paid to do so). Well, it was certainly a game changer for the unlucky people who took his ‘advice’ and invested in the offering, since Centra Tech’s co-founder was charged last year with defrauding investors of $25 million. The company had lied about having an experienced team, with co-founder Sohrab Sharma — who was sentenced to eight years in prison — inventing fictitious people to serve as its executives.
T.I.
Rapper T.I. found himself on the end of a $75,000 fine in September 2020, having promoted two unregistered and/or fraudulent initial coin offerings. These were for FLiK (a ‘digital streaming platform’) and CoinSpark (a digital-asset trading platform), with the co-founder of both — film producer Ryan Felton — ultimately taking $2.2 million in profits after secretly transferring FLiK tokens to himself and selling them in the open market, as well as actively manipulating the market for CoinSpark’s SPARK token.
Whereas the individuals above had agreed not to promote any cryptocurrencies (whether paid for the honor or not) for three years (two in the case of DJ Khaled), T.I. was barred from doing so for five years. This highlights the seriousness of his abuse.
Do Your Own Research
The above is a list of those individuals the SEC has actually been successful in charging, yet the number of celebrities wading into crypto and promoting coins or exchanges is expanding with every passing week. For instance, NFL quarterback Tom Brady and model Gisele Bündchen have been appearing in FTX commercials since 2021, while actor Matt Damon has done the same for Crypto.com.
Likewise, there are also figures such as Elon Musk and Paris Hilton who promote crypto on the basis of being invested in the space themselves. While such people aren’t advertising on behalf of anyone, they nonetheless can have an effect on markets, as evinced by Musk’s hold over the prices for bitcoin and dogecoin, as witnessed in 2021.
This raises a serious danger for ordinary retail investors, the kind who may not necessarily have the time to investigate coins thoroughly for themselves, and so who therefore are inclined to trust the apparent opinion of notable figures. They need to realize that celebrities can easily abuse their positions, as the cases above so starkly illustrate.
Instead, finding a few trusted news websites and analysts, as well as doing independent reading and research, is the only reliable method an investor has of improving their chances of making a profit. Anything else is merely snake oil.
