Kim Kardashian has been fined $1.26 million by the SEC for an absolutely shameless promotion of a cryptocurrency scam to her Instagram followers – who number over 250 million.

She has also agreed not to promote any cryptocurrency for the next three years. Shockingly, however, her lawyers played a blinder and she is not required to admit any wrongdoing.

The settlement has really annoyed me, so I’m about to get a rant off my chest.

What happened?

The incident occurred in July 2021, when Kardashian posted the below to her Instagram.

Ethereum Max – definitely not to be confused with Ethereum – is (was?) an obscure cryptocurrency token that spiked up immensely off the back of Kardashian’s post. I am tempted to use the word scam here, but instead I will be kind and I will instead say “worthless”.

I charted the price action of the token since Kardashian’s promotion. They say a picture tells a thousand words, so here you go:

Turns out, the “cryptocurrency” promoted by Kardashian was launched only a month before her post, and she was paid $250,000 to promote it on Instagram.

Within a week of Kardashian’s post, it was down 70%. Within a month, it was down over 90%. It wasn’t long before it essentially went to zero. Sad.

Kim Kardashian is a predator

It makes my stomach turn to read her post even now, eighteen months on. Kardashian exploited her followers for money, and the language used is abhorrent. “Sharing what my friends told me a few minutes ago” – ye, my friends slip me 250 G’s all the time to make posts on Instagram, Kim.

A massive proportion of Kardashian’s followers are underage. An even bigger proportion idolises her. She gave the seal of approval to what had all the looks of a Ponzi scheme – a copy and paste pump-and-dump of the famous Ethereum.

The anonymous founders of the coin took their chance – as was always planned, one suspects – and immediately dumped on the gullible buyers lured in by Kardashian’s advert.

It is impossible to know how many followers lost money off Kardashian’s post. In truth, I don’t want to know, there is plenty of bad news in the world already. What we do know is that of every dollar that each follower put in, that is now close to zero. By January, when the token had fallen 98% since Kardashian’s investors, she was sued.

How much did Kim get fined?

Obviously, what Kim did was incredibly illegal. You can’t pass off a paid advert for a scam as a personal endorsement.

So, the SEC came calling. Unfortunately, Kim is rich and famous and so, like these things tend to go in the US, she got barely a slap on the wrist. She was fined $1.26 million. To me, this is nowhere near the level of punishment that is deserved, given the shamelessness, greed and cold-hearted nature of the exploitative post.

Kardashian is estimated to be worth $1.8 billion, meaning the fine equates to 0.07% of her net worth. Answer me this – multiply your net worth by 0.07%. Is that number enough to persuade you from repeating a crime? In actuality, it is even less – it is really a $1 million fine and a return of the $250,000 she got paid.

Kardashian’s lawyers told CNN that she “is pleased to have resolved this matter with the SEC.” 

“Kardashian fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the SEC in this matter,” the attorneys added. “She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.”

She also has not had to admit any wrongdoing. She does have to resist the temptation to again promote such scams for the next three years, however. How people idolise someone like this is beyond me.

I reached out to Kim last year (screenshot above) off, when the token was down 92%, to get her comments. She has yet to reply. Maybe if she hadn’t ghosted me, she wouldn’t have been sued six months later…

The Kardashian brand is ubiquitous, a powerful Gen Z-fuelled money-making machine. This incident won’t affect things at all and has already been brushed under the carpet. But I really don’t understand; there have been celebrities cancelled for far less than this.

How bad a thing did Queen Kim do?

Make no mistake – this is stealing money from her innocent followers. I could somewhat understand it if she was paid a fortune, but what is $250K to a billionaire like Kim?

In ranting about this in my family WhatsApp group, my (Gen Z) sister leapt to the defence of Kim.

“She is so influential and has achieved more than most people”

“She is such a talented entrepreneur”

“Don’t be so dramatic”

This seems to be the defence of most people. And yeah, I agree – she is rich, influential and outrageously successful. And does she care that a nobody like me is ranting about her on the Internet? No, of course she doesn’t.

But I’m not saying she isn’t successful. That is irrelevant. If anything, it exacerbates how bad her crime is given she knew how impressionable her followers were and how influential she was. A quick $250K cheque was all that was needed for her to farm them all out.

As for being dramatic? Well, yeah – as I type this, that may be a fair point. But the individual stories of people investing in this “cryptocurrency” because Kim lied and said her and her friends were involved in it – only to lose every penny and realise that Kim was in fact paid and had never heard of the cryptocurrency, never mind invested in it – is devastating to read.

I’m willing to bet those people would not feel the same if it was their daughter, their son, their friend who lost chunks of their savings, their college fund, their hard-earned cash because their “idol” lied to them.

The only thing more fraudulent than Ethereum Max is the illusion that Kim Kardashian cares about anyone but herself.

Kim, shame on you.

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

As the entire financial world is watching the explosion in Credit Suisse’s CDS rates with angst, bringing back memories of Bear Stearns’ failure back in 2008, the SEC just charged Kim Kardashian for failing to disclose the incentives offered to promote a crypto asset, leading to Elon Musk’s detractors calling for similar charges to be leveled against him for allegedly precipitating Dogecoin’s (DOGE) pump-and-dump.

Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.

This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.

— Gary Gensler (@GaryGensler) October 3, 2022

To wit, the SEC has now charged Kim Kardashian for failing to disclose a payment of $250,000 in order to promote the EthereumMax (EMAX) token on social media. Additionally, Kardashian has agreed to “settle the charges, pay $1.26 million in penalties, disgorgement, and interest, and cooperate with the Commission’s ongoing investigation.” Today’s development has, however, energized Elon Musk’s detractors, who claim that the CEO of Tesla has continued to run a pump-and-dump scheme vis-à-vis Dogecoin.

Did Musk illegally pump-and-dump Dogecoin? Match up his sales vs his public tweets.

Of course he also filed a 13G instead of a “D” on $TWTR after weeks of negotiations to join the board and did it 11 days late to buy the stock more cheaply and Gensler did NOTHING. https://t.co/ImvQGZDfTK

— Stanphyl Capital (@StanphylCap) October 3, 2022

Regardless of the optics around Elon Musk’s relentless promotion of Dogecoin, readers should note that the CEO of Tesla has likely dotted all of the proverbial i’s from a legal viewpoint and, as such, remains quite resistant to charges of wrongdoing.

First, unlike Kim Kardashian’s inorganic endorsement of EthereumMax, Elon Musk did not receive any payment to promote Dogecoin. Musk’s critics allege that his promotion of Dogecoin was a pivotal factor behind the meme coin’s extraordinary rally in early 2021. After all, the CEO of Tesla employed a variety of tactics to promote Dogecoin, ranging from changing his Twitter profile picture to one that showcased a DOGE-related meme to tweeting DOGE-supporting policies such as Tesla’s acceptance of the meme coin as a valid payment method for merchandise on its official website. Elon Musk even exhorted McDonald’s to start accepting Dogecoin, offering the inducement to consume a Happy Meal on live TV. Dogecoin had formed a new all-time high in the runup to Musk’s Saturday Night Live appearance, only to tank thereafter when Musk termed the cryptocurrency a “hustle”. Prima facie, these developments paint a worrying picture. However, Musk’s detractors fail to account for one critical point: Tesla still holds all of its Dogecoin stash.

While announcing its earnings for Q2 2022, Tesla revealed that it had disposed of 75 percent of its Bitcoin holdings. However, during the ensuing earnings call, Elon Musk clarified that the company still held on to all of its Dogecoin stash. With the “dump” element missing in pump-and-dump allegations against Musk, it is hard to prove any material wrongdoing. Of course, it remains to be seen whether the CEO of Tesla disposed of some Dogecoin tokens from his personal stash. This determination will likely warrant a formal investigation by the SEC. The bar for such an investigation, however, remains high given the utter confusion that currently reigns over whether a particular crypto asset constitutes a commodity or a security.

Of course, Elon Musk also faces a multi-billion-dollar lawsuit by Dogecoin investors for allegedly running a “pyramid scheme”. Here too, since the CEO of Tesla did not promise any consideration – whether explicitly or via promises of future returns – to new Dogecoin investors, all of whom jumped in to take advantage of the cryptocurrency’s rally on the premise that Musk’s star power was sufficient to overcome Dogecoin’s inherent flaws, it is difficult to prove any wrongdoing.

In short, Elon Musk is unlikely to face any punitive measures from the SEC on account of Dogecoin’s price pump, barring an explosive development such as the scenario where Elon Musk is found to have maintained a personal, undisclosed stash of Dogecoin which was stealthily disposed of, coupled with the determination by the SEC that Dogecoin constitutes a security. Does this scenario fall within the realm of possibility? Certainly. Is this likely? That’s up in the air.