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Kim Kardashian’s $1.26 million fine for crypto endorsement is not what the SEC believes to be a statement

Reality TV star and online influencer Kim Kardashian’s entry into the cryptocurrency world hasn’t gone very well. Her endorsement of Ethereum Max, a red-flag altcoin that resembled a pump-and-dump scheme, last year has embroiled her along with other prominent supporters in a class-action lawsuit and caught the attention of the Securities and Exchange Commission.

With the lawsuit pending, the SEC took action Monday, fined $1.26 million and banned Kardashian from promoting cryptocurrency securities for three years. SEC Chairman Gary Gensler hailed the penalties as “a reminder to celebrities and others that they are legally required to disclose to the public when and how much they are being paid to encourage investing in securities.”

Gensler is partly right. $1.26 million is a nice big number to tout as a warning as crypto and Web3 projects increasingly adopt a marketing philosophy focused almost exclusively on celebrity endorsements. The SEC can simultaneously point to the penalty as an example of how bad actors are held accountable, and finally answer the call of many who are clamoring for increased consumer protection in Web3 systems that are inherently resilient to it.

I’m sure the SEC’s video team enjoyed the opportunity to do so make fun also with the “To the Moon” audience. Who wouldn’t?

But all of this falls a bit flat with minimal scrutiny. The posh Kardashian is being forced to pay amounts less than one percent of her net worth, and being banned from promoting crypto for three years won’t hurt her bottom line much, as she barely dipped a toe into this world to begin with.

While there is a lot of goodwill and some promises that government agencies will hold influencers linked to Web3 spaces accountable, the SEC’s ruling comes after multiple crypto scams with close celebrity ties. Several NBA players and musicians have let NFT projects dormant after adjusting to initial minting and walks, leaving buyers with digital assets that have plummeted in value. YouTubers Jake and Logan Paul have been accused of promoting multiple crypto and NFT scams, with Jake being a named defendant in a class-action lawsuit alleging cryptocurrency promotion Safemoon.

Several members of Faze Clan have been either suspended or fired over the past year after claims they benefited from an alleged pump-and-dump scheme linked to charity crypto token Save The Kids.

Kardashian isn’t even the most egregious celebrity involved in the Ethereum Max situation. Boxer Floyd Mayweather Jr. is a defendant in the same class action lawsuit as Kardashian and has a years-long history of promoting crypto projects without disclosing payments and NFT projects being abandoned after they were originally minted. In fact, Mayweather already paid a little over $600,000 in an SEC fine in 2018 for promoting multiple initial coin offerings.

Knowing this story severely undermines the SEC’s message to hold celebrity supporters accountable. It’s a twofold problem: keeping up with the number of influencers whose practices violate SEC regulations, and imposing penalties that are less than slaps on the wrist to their record.

The SEC and other government agencies can remind influencers of the issue as often as they like, but it won’t stop bad actors in both the influencer and Web3 spaces without increased oversight and tougher penalties. Drops in the bucket cannot cut it.

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