A slew of celebrity-backed meme coins have captured the cryptocurrency zeitgeist recently, but experts say they may be taking on greater legal risks compared to past enforcement actions.
The U.S. Securities and Exchange Commission (SEC) has previously targeted celebrities for promoting cryptocurrencies on social media. This includes Kim Kardashian, famous entrepreneur and Caitlyn Jenner’s stepdaughter. And this week, Jenner launched a meme coin with the Olympic gold medalist’s name on Solana and Ethereum.
Because Jenner’s meme coins are unregistered securities, she could face greater legal penalties than Kardashian, securities law attorneys said. decoding. In essence, Jenner can be viewed as two issuers. and Promoter – not just a paid shill.
The SEC is the regulator in 2022 when Kim Kardashian was accused of promoting Ethereum Max, which had nothing to do with the second-largest cryptocurrency. assert The entrepreneur’s social media activity violated the “anti-promotion provisions of the federal securities laws.”
The only thing Kardashian did wrong was not disclosing $250,000 in compensation she received for a promotion, said Philip Moustakis, who previously served as senior counsel in the SEC’s enforcement division and is now a partner at Seward & Kissel LLP.
Kardashian paid $1.26 million to settle the SEC’s claims without admitting or denying the SEC’s charges. Kardashian agreed to pay $1 million in fines and approximately $260,000 in restitution of this amount.
“The disgorgement is what (Kardashian) paid for the publicity, which in most cases will be much lower than if it had been fully capitalized by someone else issuing tokens,” Moustakis said. decoding. “The severity of the exposure and the severity of the conduct are important.”
Launched via Pump.fun, a Solana protocol that allows anyone to launch instantly tradable tokens for just a few dollars worth of cryptocurrency, Jenner claims he has no custody of the JENNER tokens at Solana.
According to analysis by Bubblemaps, a group of specific digital wallets that held more than 25% of JENNER’s supply at launch later dumped the token for approximately $500,000 in other coins. Earlier this week, Jenner’s Twitter account claimed she had bought more JENNER and would “always be optimistic.”
Despite Jenner being “pleased with the growth” of the Solana-based meme coin so far, the asset has faced headwinds since the launch of its Ethereum-based counterpart. Solana’s Zener value has plummeted 60% since Monday to $0.00672251.
Her former business partner involved in launching Solana said: decoding that That person is not involved. With Jenner’s Ethereum-based token.
Jenner’s role in the meme coin launch may be distinctly different as part of the launch team, but her promotional statements could still land her in hot water, said Arthur Jakoby, a partner at law firm Herrick. . decoding.
“What you promote still applies,” he said. “This is actually more risky (than what Kim Kardashian did) because you could be prosecuted for soliciting unregistered securities.”
It is about providing guidance to the public on how to purchase assets. post link Jakoby said directing people to where they can buy them could be considered a solicitation. He went on to say that it does not necessarily have to be targeted advertising and could also include mass marketing via the internet.
“It’s sad that this still happens, but it happens for a reason,” he said. “People think that having a celebrity involved in the project will attract more people.”
When it comes to Kardashian, the SEC generally believes it is worthwhile to take enforcement action that would draw broad public attention, Moustakis said. This is especially true if the agency believes enforcement action will change market behavior for the better, he added.
“A publicity 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 a higher risk when they make public statements, market themselves, and promote their tokens.”
Edited by Ryan Ozawa.
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