Experts tell The Post that Kim Kardashian’s $1.26 million fine from the Securities and Exchange Commission could be the first shot in a larger regulatory volley against celebrities who sell cryptocurrency.
A-listers like Matt Damon, Tom Brady, and Larry David, who were in ads for cryptocurrency exchanges during this year’s Super Bowl, as well as stars like Mike Tyson and Reese Witherspoon, who took part in “NFT drops,” could lose their jobs if the SEC cracks down on cryptocurrencies.
John Coffee, a professor of law at Columbia and an expert on securities, told The Post, “This is a legal strategy to go after public figures. Now everyone in Hollywood will take notice.” “[SEC Chair] Gary Gensler doesn’t worry about being in the news.”
Celebrities have been selling things on QVC and informercials for a long time, long before Instagram or cryptocurrencies. But lawyers warn that selling financial products is much more difficult than selling skincare or clothing.
Former SEC enforcement attorney Ron Geffner told The Post that the Kardashian news is just the “tip of the iceberg” because celebrities aren’t thinking about how securities laws might apply to cryptocurrencies.
Geffner said, “When it comes to securities and the laws that govern them, there are far more far-reaching effects for celebrities and influential people than in other industries.”
Experts said that Kardashian’s obvious promotion of a single crypto token was easy for regulators to catch. Garrick Hileman, a crypto expert and visiting fellow at the London School of Economics, says that celebrities who promoted sites like Crypto.com and FTX, where customers can trade a wide range of cryptocurrencies, could also be targets.
Hileman said that using celebrities to promote exchanges made him wonder if that was the next step.
Gensler has said that many cryptocurrencies are “unregistered securities,” and Hileman said that the SEC could think that celebrities who promote sites for trading digital coins are breaking securities laws if they do so. He also said that David, Damon, and Brady should be “worried” about what happened with the Kardashians.
“If you get in the SEC’s crosshairs, your reputation will take a hit,” he said.
A law professor at George Washington University named Lawrence Cunningham asked the SEC to do more to go after celebrities who promote cryptocurrencies.
“Manipulative schemes pose the biggest risk to average American investors,” Cunningham told The Post. “The SEC’s main job under the law is to reduce those risks by going after fraudsters.” “Picking one celebrity as a showpiece and focusing on the fact that she didn’t report her payments doesn’t show a strong enforcement program.”
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Jessa Martin is the author of Nogmagazine, A professional in writing by day, and novelist by night, she received her bachelor of arts in film from Howard University and her master of arts in media studies from the New School. A Brooklyn native, she is a lover of naps, cookie dough, and beaches, currently residing in the borough she loves, most likely multitasking.