Ethereum
Caitlyn Jenner Releasing a Coin Is Riskier Than Kim Kardashian Shilling Ethereum Max, Legal Experts Say
A slew of celebrity-backed coins have recently captured the crypto zeitgeist, but experts say they could face greater legal risks than past enforcement actions.
The United States Securities and Exchange Commission (SEC) has previously targeted celebrities for promoting cryptocurrencies on social media, a list that includes Kim Kardashian, the famous entrepreneur and daughter-in-law of Caitlyn Jenner. And Jenner this week launched meme coins on Solana and Ethereum named after the Olympic gold medalist.
Because Jenner’s coins are unregistered securities, she could face greater legal consequences than Kardashian, securities law attorneys said. Decrypt. Essentially, Jenner could be considered both a transmitter And a promoter, not just a paid accomplice.
When the SEC revealed charges against Kim Kardashian in 2022 for her promotion of Ethereum Max, unrelated to the second largest crypto regulator. claims the entrepreneur’s social media activity violated the “anti-promotion provision of the federal securities laws.”
The only thing Kardashian did wrong was not disclose the $250,000 in compensation she received for her promotion, said Philip Moustakis, who previously was a senior attorney in the state’s enforcement division. SEC law and is now a partner at Seward & Kissel LLP.
Without admitting or denying the SEC’s charges, Kardashian paid $1.26 million to settle the SEC’s claims: of that amount, Kardashian agreed to pay $1 million in penalties, in addition to approximately $260,000 restitution dollars.
“The disgorgement is how much [Kardashian] been paid for vandalism, which in most cases will be considerably less than […] a complete capital increase by someone else issuing a token,” Moustakis told Decrypt. “It’s the severity of the exposure, and then it’s the severity of the driving.”
Launched through Pump.fun – the Solana protocol that allows anyone to instantly launch a tradable token for just a few dollars worth of crypto – Jenner claims she did not have custody of any JENNER tokens on Solana.
A separate group of digital wallets that held more than 25% of JENNER’s supply at launch later dumped the tokens for around $500,000 into other coins, according to analytic from Bubblemaps. Earlier this week, Jenner’s Twitter account claimed that she had purchased more JENNER and would “always be optimistic.”
Although Jenner is “happy with the growth“From its Solana-based meme coin so far, the asset has encountered headwinds following the launch of its Ethereum-based counterpart. Jenner’s value on Solana has fallen 60% since Monday to $0.00672251 .
His former business partner associated with the Solana launch said Decrypt that he is not associated with Jenner’s Ethereum-based token.
While Jenner’s role in the meme coin launches may be distinct as a member of the issuing team, her promotional statements could still land her in hot water, said Arthur Jakoby, a partner at the Herrick law firm . Decrypt.
“The solicitations still apply,” he said. “It’s actually riskier [than what Kim Kardashian did] as they may be accused of seeking an unregistered guarantee.
Giving the public instructions on how to purchase an asset – perhaps, post a link where it could be purchased — could be considered solicitation, Jakoby said. This does not have to be targeted advertising per se, he continued, and could include mass Internet marketing.
“It’s sad that these things still happen, but they happen for a reason,” he said. “People think having some sort of celebrity involved in the project will attract more people.”
Regarding Kardashian, the SEC generally sees value in taking enforcement actions that will attract broad public attention, Moustakis said. This is especially true if the agency believes the enforcement measures will change market behavior for the better, he added.
“A bragging case against Kim Kardashian is going to get a lot more attention than a case against someone you’ve never heard of,” Moustakis said. “Celebrities are, in some ways, at greater risk when making public statements, marketing, and promoting their own tokens.”
Edited by Ryan Ozawa.