A group of celebrity-backed cryptocurrencies have captured the crypto zeitgeist recently, but experts say they may be exposed to greater legal risks than previous enforcement actions.
The US Securities and Exchange Commission (SEC) has targeted celebrities for promoting cryptocurrencies on social media before — a list that notably includes Kim Kardashian, the famous entrepreneur and stepdaughter of Caitlyn Jenner. This week, Jenner launched meme coins on Solana and Ethereum bearing the Olympic gold medalist’s name.
To the extent that Jenner’s cryptocurrencies are unregistered securities, she may face greater legal consequences than Kardashian’s, lawyers specializing in securities laws said. Decryption. In essence, Jenner can be seen as an exporter of both And Promoter – not just a paid shill.
When the SEC unveiled charges against Kim Kardashian in 2022 over her promotion of Ethereum Max — which has nothing to do with the second-largest cryptocurrency — regulators… claimed The entrepreneur’s social media activity violated the “anti-promotion provision of the federal securities laws.”
Philip Moustakis, who previously served as senior counsel in the SEC’s Enforcement Division and is now a partner at Seward & Kissel LLP, said the only thing Kardashian did wrong was not disclose the $250,000 compensation she received for her promotion.
Without admitting or denying the SEC’s accusations, Kardashian paid $1.26 million to settle the SEC’s claims: of that amount, Kardashian agreed to pay $1 million in fines, as well as approximately $260,000 in restitution.
“Nausea is how much [Kardashian] I got paid to promote, which in most cases will be much less than […] “The entire capital raise is by someone else issuing the token,” Moustakis told Decrypt. “It’s the seriousness of the exposure, then the seriousness of the behavior.”
Launched through Pump.fun – the Solana protocol that allows anyone to launch a tradable token instantly for just a few dollars in cryptocurrency – JENNER claims it does not have custody of any of JENNER’s tokens on Solana.
A premium group of digital wallets that held more than 25% of JENNER’s supply at launch sold the tokens for about $500,000 in other coins, according to analytics from Bubblemaps. Earlier this week, Jenner’s Twitter account claimed that she had bought more Jenner products and would be “always optimistic.”
Although Jenner is “happy with the growth” of her Solana-based cryptocurrency so far, the asset has faced headwinds following the launch of its Ethereum-based counterpart. Jenner’s value on Solana has dropped 60% since Monday to $0.00672251.
Her former business partner linked to the launch of Solana said Decryption Which He’s not attached Using Jenner’s Ethereum-based token.
Although Jenner’s role in the cryptocurrency launch may be distinguished as part of the launch team, her promotional statements could put her in an awkward position, said Arthur Jacoby, a partner at the law firm Herrick. Decryption.
“The promotional stuff is still going,” he said. “This is actually more serious [than what Kim Kardashian did] Because they can be accused of soliciting an unregistered guarantee.
Giving general instructions on how to purchase assets – perhaps, Post a link Where it can be purchased could be considered a solicitation, Jacobi said. He continued by saying that this does not have to be targeted advertising per se, and can include comprehensive online marketing.
“It’s sad that these things still happen, but they happen for a reason,” he added. “People think that involving some kind of celebrity in the project will attract more people.”
With respect to Kardashian, the SEC typically sees value in taking enforcement actions that would receive broad public attention, Moustakis said. This is especially true if the agency believes the executive action will change market behavior for the better, he added.
“A case against Kim Kardashian is going to get a lot more attention than a case against someone you’ve never heard of,” Moustakis said. “Celebrities, in a way, are at greater risk when they make public statements, market, and promote their iconic icons.”
Edited by Ryan Ozawa.