Why the SEC just fined Kim Kardashian $1.3 million over crypto

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If there's one thing regulators and crypto insiders can agree on, it's holding influencers accountable.

In fact, the only thing better than publicly shaming influencers participating in pump and dump schemes, is seeing them fined. To kick off the week, the Securities and Exchange Commission (SEC) hit Kim Kardashian with a much deserved $1.26 million fine and barred her from promoting crypto for three years.

Adult film star and media mogul Kim Kardashian has become the latest target of the SEC for promoting crypto tokens without disclosing being paid to do so. (Source: Getty Images)

It's not the first time the SEC has gone after a celebrity who has promoted a crypto project to his or her followers, and certainly won't be the last. For example, in the last big crypto boom, the SEC used Floyd Mayweather and DJ Khaled as their shots across the bow in 2018 to remind everyone you can't take money from crypto projects and shill them to your followers without disclosing you're being paid to do so.

Kardashian's fine, however, is double what the SEC hit Mayweather with, and nearly 10-times what Khaled agreed to pay. That's interesting for a couple of reasons (as is the accompanying statement in the SEC's press release around the announcement of the settlement with Kim K.) But first, let's dig into why what Kim did is especially bad — and why it was such an easy one for the SEC to target.

For anyone who thinks all of crypto is one big scam, that's fine, but let's at least agree there are varying levels of scams. (After all, there's no need for you to be purposefully ignorant.) In Kardashians case, she was promoting one of the most egregious projects of this bull run. I say egregious because what she promoted to her followers was a project called "Ethereum Max." If its name makes you think it it improves upon Ethereum, that's by design. But, in reality, Ethereum Max was just a token issued on Ethereum. That meant it could easily be bought and sold, but fundamentally wasn't doing anything more than the other so-called "shit coins" we've discussed before.

It was promoted back in 2021 as a token that could be used to buy tickets around the Logan Paul Floyd Mayweather fight (surprise, surprise seeing Mayweather attached to yet another sketchy crypto project.) In reality, as CoinDesk reported back then, and as anyone in crypto knew at the time, Ethereum Max was nothing more than an attempt to "pump" up hype and then let the creators "dump" on anyone who was tricked into buying it as the "next big thing."

At best, Kardashian pumped Ethereum Max and didn’t know what she was doing. At worst, she accepted $250,000 to hype something that could've hurt her followers — all without clarifying that she was paid to do so.

Now, the other thing that is interesting about this particular settlement is that it signifies another attempt by the SEC to further press the case that most everything in crypto is a "security" just like shares in companies. Just read what SEC Chair Gary Gensler said in the press release:

"Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities," Chair Gensler said (emphasis mine.)

So, the fines are getting higher for influencers promoting cryptocurrencies, and Chair Gensler continues to call most everything that is not Bitcoin or Ethereum a "security." Generally these are pretty strong signals they aren't messing around anymore — and something I've been trying to warn everyone about for a while.

Most of the media coverage on this particular case continues to focus on this being about Kim Kardashian (or, in the crypto circles, about how hilariously wild the accompanying SEC video on this was — featuring actors who really sold what it means to get pumped and dumped in scams like Ethereum Max.) But to me, the tea leaves continue to point towards bigger actions brewing at the SEC.

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