The Securities and Exchange Commission has been keeping up with the Kardashians. Mainly, it’s been keeping up with Kim, whom the SEC charged with shilling a novelty shit coin — that at least one crypto pundit called a “ponzi scam” — without disclosing that she had been paid $250,000 to do so. Monday morning, the SEC announced that Kim had agreed to settle the charges, and pay a fine of $1.26 million.
The coin in question is called “Ethereum Max.” It’s an ERC-20 token, meaning it’s built on the Ethereum blockchain, but has no formal relation to the much more popular cryptocurrency. Kim mentioned it on her Instagram story in June of last year, in a post that was distinctly not her style — a blue and red Marvel-ish graphic captioned in all caps:
ARE YOU GUYS INTO CRYPTO???? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN! A FEW MINUTES AGO ETHEREUM MAX BURNED 400 TRILLION TOKENS — LITERALLY 50% OF THEIR ADMIN WALLET GIVING BACK TO THE ENTIRE E-MAX COMMUNITY.
#EMAX #DISRUPTHISTORY #ETHEREUMMAX #WTFEMAX #GIOPEMAX #ETHEREUMMAX #AD
Unfortunately, the “friends” she was talking about here were the token’s founders, who paid her $250,000 for the mention. At the time, the token was just one month old. Maybe she was close with Floyd Mayweather or Logan Paul, who were accepting EMAX as payment for their pay-per-view fight around the same time. Both Kim and Floyd were named in a class action suit from investors earlier this year, alleging they had falsely inflated the coin’s price. At that point, the token had lost some 97 percent of its value.
Though Kim can disclose normal spon with the hashtag “#ad,” the SEC requires celebrities and others to “disclose to the public when and how much they are paid to promote investing in securities,” SEC Chair Gary Gensler wrote in a release about the charge (emphasis added). Kim’s lawyer told CNBC she “fully cooperated with the SEC from the very beginning” and “wanted to get this matter behind her to avoid a protracted dispute.”
EMAX’s slogan is “disrupt history.” But at the time, they mostly seemed to be disrupting the conventional means of launching a token. It was not available on common coin exchanges, for example, and had not even released a white paper yet — the basic document from developers that outlines a coin’s purpose and operations. Had Kim waited for the white paper, she might have known that a cornerstone of the token’s “mission and values” — alongside the noble goals of “perseverance,” “innovation,” and “learning” — was “transparency.”
But at least she is learning. The fine comprises the original $250,000 payment, plus interest and a $1 million penalty. As part of the deal, Kim is barred from promoting crypto assets for three years. Maybe she should find some new friends. We suggest Ben McKenzie.
Meanwhile, all this is happening on the same day Spotify launched her new podcast, Kim Kardashian’s The System: The Case of Kevin Keith. The series, narrated by Kim and produced by Lori Rothschild Ansaldi, follows the story of Keith’s triple-homicide conviction and a three-decade campaign to prove his innocence. According to Deadline, Kim tries to “shed light on a legal system that can often be deliberately puzzling.”