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Kim Kardashian Agrees to Pay $1.26 Million in Penalties after Promoting EMAX Tokens

One of the most active legal debates in the world of cryptocurrency is whether or not this form of investment should be classified as a “security” under the SEC’s official definition. Crypto enthusiasts insist that this asset is not a security, while the SEC and concerned government bodies are arguing the opposite. Investors, average Americans, and even celebrities are getting caught in the middle of this debate. One such person is Kim Kardashian, who was just ordered to pay over $1.25 million in penalties for promoting a crypto token on social media. But what does this have to do with the SEC classification?

Kim Kardashian Agrees to Pay Hefty Penalty for Pushing Crypto

On October 3rd of 2022, it was reported that Kim Kardashian had agreed to pay $1.26 million in penalties in a settlement with the SEC. Her “crime” was promoting the EMAX Token on her social media page. But why is this such a big deal? The SEC has very strict regulations about the promotion of securities. Under these rules, anyone who promotes or endorses certain forms of investments must clearly and publicly communicate that they are being paid to do so. Kim Kardashian did not do this when she promoted the Emax Token on social media.

One of the most interesting things about this settlement was that the SEC actually revealed how much she had been paid to promote the token. According to this government organization, the celebrity was paid $250,000. Not bad for a single social media post. This gives us a sense of how much other celebrities might have been paid for similar endorsements, such as Larry David and Tom Brady.

But Is Cryptocurrency Really a Security?

Kim Kardashian agreed to settle this case instead of going to court. This makes sense given the fact that her net worth is rumored to be in the billions. After all, $1.26 is nothing to her — especially when you consider that she has just settled her divorce with Ye. This provided her with $200,000 per month in child support and a new multi-million-dollar mansion.

But on the other hand, you might argue that she would’ve escaped legal liability if this case had gone to court. You see, in order for the SEC to penalize her for promoting securities, they would need to convince the court that cryptocurrency (specifically the Emax Token) is indeed a “security.” And as we have seen in multiple court cases, this is an argument that the SEC almost always loses.

So far, only one cryptocurrency has been classified as a security — and that was the LBC Token sold by LBRY. This is hardly enough to represent a precedent, and the decision is being appealed by LBRY. The general consensus among the legal community and the crypto community is that tokens are not securities.

Then again, that didn’t stop the SEC from referring to the Emax Token as a security at least twice in their press released regarding Kim K’s penalties. It’s no secret that the SEC wants all cryptocurrencies classified as securities, as this would give them the power to regulate these digital assets. With Kim K’s settlement and LBC’s new classification, one has to wonder whether we are seeing a slow but steady move toward regulation for all cryptocurrencies.

Sources

  1. https://www.coindesk.com/policy/2022/11/07/lbry-sold-tokens-as-securities-federal-judge-rules/
  2. https://www.sec.gov/news/press-release/2022-183
  3. https://www.theguardian.com/music/2022/nov/29/kardashian-kanye-west-divorce-agreement-reached

Image Credit: https://en.wikipedia.org/wiki/en:David_Shankbone

Image License: https://creativecommons.org/licenses/by/3.0/deed.en

 

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