The United States Securities and Exchange Commission (SEC) has punished celebrity Kim Kardashian for advertising an alleged cryptocurrency scam. According to the order issued by the SEC, Kardashian must pay a fine of $1.26 million, or about $7 million at current prices. In the punishment order issued on Monday (3), the SEC claims that Kim Kardashian promoted a token called EMAX, issued by a blockchain called Ethereum Max. However, the token is a pyramid scheme that promises “guaranteed” profitability for cryptocurrency applications. Furthermore, Kardashian did not disclose that she received $250,000 to make a post about EMAX on her Instagram account. The amount corresponds to R$ 1.35 million in current values, that is, almost 20% of the total fine that Kim Kardashian will have to pay to the SEC.
Kim Kardashian indicted by the SEC
As reported by CryptoFácil, Kim Kardashian came into the crosshairs of regulators by promoting Ethereum Max in early September. At the time, the American socialite made a post on her Instagram promoting the cryptocurrency. The post also contained a link to the EthereumMax website, which offers instructions for potential investors to purchase EMAX tokens. But the SEC claims that the cryptocurrency offered returns to investors, something that is prohibited under US real estate law. Under the law, a company can only offer income if it has an SEC license, something that Ethereum Max did not have. In addition, the municipality prohibits the promise of guaranteed returns on assets whose valuation is not fixed, which is the case with cryptocurrencies. In exchange for the payment of the amount – which includes a fine, restitution and interest – the SEC will drop the charges against Kardashian. Additionally, the socialite will also cooperate with the SEC’s ongoing investigation against Ethereum Max. Of the total amount of the fine, US$ 260 thousand will go towards the payment of restitution and loss interest, while US$ 1 million is for the fine itself. In addition, Kim Kardashian will be banned from advertising any furniture asset on her social media for three years. “This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto asset securities, it does not mean that these investment products are suitable for all investors. We encourage investors to consider the potential risks and opportunities of an investment in light of their own financial objectives,” said Gary Gensler, chairman of the SEC.
Gary Gensler’s stance against cryptocurrencies
SEC Chairman Gary Gensler considers all cryptocurrencies except Bitcoin (BTC) and Ethereum (ETH) to be securities. In the case of BTC and ETH, Gensler stated that they are commodities and therefore should be regulated by the Futures and Commodities Trading Commission (CFTC). However, Gensler again changed his stance after ETH went through The Merge update. According to the executive, the move from cryptocurrency to Proof-of-Stake (PoS) mining makes ETH a security. Soon, he is now under SEC scrutiny. Gensler believes that PoS-based cryptocurrencies are securities under the Howey test. But CFTC Commissioner Christy Romero claims that the CFTC still considers Ethereum a commodity, even after The Merge.
