The US Securities and Exchange Commission is regulating Crypto to minimize risks to investors. After the recent conference on tokenization by the Banque de France, Crypto Asset Services Providers (CASPs) have to adhere to strict guidelines.
The anti-touting provision is integral to the SEC mission, and violators risk fines and sanctions in addition to losing their advertising fees. On June 2021, Kim Kardashian advertised EMAX tokens from EthereumMax to her 331 million followers on Instagram.
The reality TV star failed to disclose that she had received $250 million for the ad and misled her fans to believe that she was only reiterating what she heard from her friends. The billionaire was therefore found liable for touting a financial asset.
“Are you guys into crypto??? This is not financial advice but sharing what my friends just told me about the Ethereum Max token!” she posted.
Kim Is Complying with the SEC Decision
Following the ruling against her, Kim Kardashian is banned from advertising Crypto for three years, effective June 2021. The fine comprises $1 million in fines, $250,000 in advertising fees, and $10,000 in commission.
According to the SEC director for enforcement, Gurbir Grewal, federal security laws are non-negotiable. Regarding celebrity endorsements, Grewal says there must be full disclosure regarding the amount, source, and nature of compensation received for the advertisement.
On her part, Kim Kardashian has neither admitted liability nor denied the allegation. Her attorney confirms that she will pay the fine and comply with the SEC verdict.
The Businesswoman is a Crypto Enthusiast
Kim Kardashian has an estimated value of $1.4 billion. She has co-founded a private equity firm that serves consumer media, hospitality, e-commerce, consumer products, and digital and luxury industries. These industries are embracing Crypto to diversify their asset portfolios.
Research shows that institutional investors own the majority of Cryptocurrencies with long-term investment horizons. Hence, Crypto issuers can target corporates to promote adoption.
The celebrity can play a vital role in sensitizing the world to the immense opportunities digital assets offer.
The SEC is Mitigating Risks in the Crypto Market
The Crypto market has been volatile in the year following economic challenges such as inflation and supply chain glitches. Hence, the financial markets in which Crypto forms part have been on a bearish trajectory in 2022.
However, the correlation between Crypto and the financial market decreases as Digital Markets are becoming less volatile while stock markets falter.
SEC Chair Gary Gensler advises crypto investors to make conscious investment decisions to avoid being swayed by short-term hypes. Marketing and celebrity endorsements of digital currencies can create market disequilibrium leading to short-term price variations. Although the market can correct itself when the hype dies down, some investors may lose in the short term, making Cryptocurrencies lose credibility.