Kim Kardashian

Yesterday, Gary Gensler announced that the SEC had charged Kim Kardashian for illegally promoting EMAX, a token on the Ethereum blockchain that forms part of a project which makes games.

Kim Kardashian fined

Kim Kardashian, as one of the most famous women in the world, has been made an example of by the SEC for using her power and fame to enrich herself at the expense of her followers.

In June 2021, Kardashian promoted the token on her Instagram story, and failed to mention that she was paid $250,000 to publish the post.

In the post, she highlighted the fact that a significant amount of EMAX had been burned by the development team, meaning that the token appeared scarcer than it was before.

The SEC announced that they were fining her for $1.26m and that she had fully complied with their requests.

In addition to being fined $1.26m, Kardashian has been banned from promoting anything related to cryptocurrencies for three years.

What is EMAX?

Ethereum MAX is a project that has been promoted many influencers, including Floyd Mayweather.

There isn’t much utility to this project in any meaningful way and has fallen 99% since its all-time highs.

Despite making grandiose and hyperbolic claims during the project’s inception, Ethereum MAX failed to deliver on many stages of their roadmap and the project doesn’t appear to have made any progress recently.

EMAX has fallen 95% since Kim Kardashian promoted it

One of the main risks that the SEC highlights when it comes to influencers marketing cryptocurrencies is that they do not disclose that they are paid to promote them, and their interests are not the same as the interests of their followers.

In this case, the interests of Kim Kardashian were to be paid a hefty dollar sum in order to promote the project – a fact that she failed to disclose to her followers.

Although Kim Kardashian may be skilled in some areas, she is not an investment advisor, and her shills ought not be construed as investment advice.

Those of her followers who did follow her advice would have completely financially destroyed themselves, with EMAX now down 95% since she first began to promote it.

Are most tokens securities?

According to Gary Gensler, anything that was issued “pursuant to an ICO” or “with an expectation of profit” is most likely a security.

He has confirmed that Bitcoin does not fall into this category and can be considered a commodity but wouldn’t categorically state that any other tokens or assets are in the same category.

The SEC argues that one of the crucial differences between a security and a commodity is the fact that with a security there are a group of insiders who have disproportionate control over the future direction of the project, and who have the power to enrich themselves as founders.

Who could be next to face the SEC’s wrath?

As of now, there are still countless influencers worldwide who continue to promote coins and tokens without making the appropriate disclaimers.

Crypto influencers regularly promote projects that they know to be scams or know not be completely legitimate, and then sell their equity to use their followers as exit liquidity.

Floyd Mayweather has already been sued over promoting Ethereum MAX, but despite these high-profile litigations, there continue to be scores of those who promote cryptocurrencies without appropriate disclaimers.

Gensler has said that a simple hashtag is not enough of a disclaimer – time will tell what precedent such a decision sets for promotions going forward.

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