Would you invest in a cryptocurrency if your favorite celebrity promoted it? The United States Securities and Exchange Commission (SEC) thinks so. Therefore, the SEC fined Kim Kardashian $1.26 million for talking about the crypto EthereumMAX (EMAX) without specifying it was advertising.
The SEK accused Kardashian of promoting the crypto asset without disclosing it had received $250,000. Hence, she can no longer advertise like this for the next three years.
This is the second time Kardashian has faced the law in this case. The community that bought EMAX and lost its investment sued Kardashian, Paul Pierce, and Floyd Mayweather in September 2021.
In recent years, the regulatory entity has taken action against anyone who spreads projects with crypto assets that may be scams, regardless of whether they are celebrities or influencers.
The Pump-and-Dump threatens the market
Regulators are targeting the behavior of Kim Kardashian and other prominent personalities and how it influences the crypto market. The reason is that celebrities can take advantage of her influence to manipulate investors and make a profit.
That is the “Pum-and-Dump” strategy. Generally, a small group buys an unknown token at a low cost. Then, they spread a lot of content about it (it does not matter if it is false advertising), and once they manage to inflate the price, they collect their profits, causing massive losses among investors.
The problem with influencers falling into this type of scheme is that many more people are exposed to misleading advertising. Therefore, losses can be massive in large communities. In turn, influencers are the first to benefit and make a profit.
Consequently, regulatory entities must remain vigilant about the dangers incurred by celebrities like Kardashian and reduce investors’ crypto losses.
Being famous does not necessarily make them experts in specific fields, especially cryptocurrencies. Thus, we can see how the experts in this technology are cautious when promoting any project.
A problem that will continue in long term
The number of shitcoins you need to stay away from is plentiful, and many people want to make off with the money of the unsuspecting. To do this, they repeatedly choose celebrities and influencers to advertise their projects.
Sadly, this won’t be the last time we’ll see celebs like Kim Kardashian challenged by regulators over their statements on crypto. Therefore, you must consciously choose which projects to invest in and not get carried away by the tide and social networks.
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