The TV personality Kim Kardashian has learned the hard way the price of illegally promoting a cryptocurrency according to an article in The New York Times. Ms. Kardashian is going to pay the S.E.C. $1.26 million due to her crypto promotion efforts on behalf of EthereumMax. We recently advised that our readers ignore celebrities who are promoting cryptocurrencies. Even if a movie star reveals that they have been paid to promote a cryptocurrency the bottom line is that they are not experts on the subject.
How Much Was Ms. Kardashian Paid to Promote EthereumMax?
There are good reasons why people being interviewed on business shows like Bloomberg or writing for business publications commonly finish their spiel with a disclaimer about what investments they own or not and who they work for. Kim Kardashian was paid a quarter of a million dollars to say nice things about a crypto token sold by EthereumMax. So, Ms. Kardashian is not going to prison like Martha Stewart did, but she is coughing up $1.26 million to pay the S.E.C. How is EthereumMax doing?
Hype vs Profits in the World of EthereumMax
It would be one thing if a person got paid to hype an investment opportunity that turned out to be profitable. Perhaps the person doing the promoting did not know what they were talking about but investors who followed their advice made money. What has happened with the EthereumMax token promoted by Ms. Kardashian? CoinDesk looks at EthereumMax which is not Ether or any product offered by Ethereum. It is another token entirely which, according to CoinDesk, the S.E.C. noted that “any investor who read the EthereumMax project’s grand plans for inking deals that “drive value” into EMAX or heard its promoters predicting price pumps would have the “reasonable expectation” of making money.”
The fact of the matter is that after Kardashian’s promotion EthereumMax has fallen 97% in value! The company’s promotions promised preferred access to NFTs, crypto casinos, and more. According to CoinDesk much if not all of these promises are yet to come to be. As noted by The Times the S.E.C. has a long history of sanctioning celebrities who promote investments and do not reveal that they are being paid to do so. This case was prominent enough that the S.E.C. Chair, Gary Gensler made a statement: “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.”
Damage to Investors Due to Promotion of a Bad Investment
Ms. Kardashian took a more then $1 million hit for promoting a crypto token and not admitting that she was being paid for her efforts. If she had run a disclaimer at the end of her comments, she might not have had to deal with the S.E.C. and lose money. Unfortunately, folks who followed her advice lost pretty much all of their investments if they purchased and stayed invested as the token fell in price. Today there are a million billion tokens and a market cap of $12,000. An individual token is worth $0.000000006018. Investors in the token have lost roughly $12,000 x 20 = $240,000 based on today’s market cap and the more than 95% loss since June 2021. The opinion offered by Business Insider is that the token’s value is and was based entirely on hype! Unfortunately, Ms. Kardashian failed to mention that.
Price of Illegally Promoting a Cryptocurrency – SlideShare Version
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