The SEC has rung the bell again on a celebrity touting a crypto token offering without adequate disclosure of a paid role. On October 3, 2022, the Securities and Exchange Commission released its order instituting cease and desist proceedings against Kim Kardashian and detailing Kardashian’s violation of Section 17(b) of the Securities Act (see Administrative Proceeding File No. 3-21197). Kardashian came under scrutiny from the SEC after she promoted EthereumMax Tokens (Emax Tokens) via her Instagram account in June of 2021, near the height of the cryptocurrency market, without making the proper disclosures. The SEC had previously fined boxer Floyd Mayweather and rapper DJ Khaled in 2018 for similar violations of the SEC’s “anti-touting” rules.

Continue Reading Oops they did it again – SEC brings Crypto Anti Touting Action against another celebrity – this time Kim Kardashian

Last month, a bipartisan pair of senators released the first comprehensive cryptocurrency bill that, though it is unlikely to become law, will frame how Congress discusses future legislation. The sweeping draft from Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), viewed as friendly to the crypto industry, defines digital assets and proposes a lighter-touch regulatory architecture, among the provisions that address current core cryptocurrency policy debates in Washington.

The Responsible Financial Innovation Act would settle jurisdictional battles among executive branch agencies by giving the Commodities Futures Trading Commission (CFTC) oversight over most digital assets and constraining the authority of the Securities and Exchange Commission (SEC), whose chairman, Gary Gensler, has taken a more combative stance toward the crypto industry. The CFTC would not have authority over digital collectibles or non-fungible digital assets, including NFTs. While NFTs are outside the scope of the current draft, a future proposal could alter the status quo.

Continue Reading Bipartisan Bill to Regulate Digital Assets Introduced: Pathway to Comprehensive Regulation Remains Unclear, NFTs Not Addressed

This article was previously published on Venable’s All About Advertising Law blog.

class action lawsuit filed against Kim Kardashian, Floyd Mayweather, and former professional basketball player Paul Pierce earlier this month underscores the need for celebrity endorsers to take care when they approach any endorsement activity in the cryptocurrency space.

The lawsuit alleges that the celebrities collaborated with Ethereum Max, a company offering ERC-20 cryptocurrency tokens (EMAX Tokens), and its executives to engage in a “pump-and-dump” scheme promoting investments in the company’s tokens. The complaint alleges that the three celebrity influencers misleadingly promoted EMAX Tokens to potential investors, touting the ability of investors to make significant returns due to the favorable “tokenomics” of the EMAX Tokens, when in fact the tokens were practically worthless. The class action alleges violations of California’s Unfair Competition Law, California’s Consumers Legal Remedies Act, aiding and abetting, and unjust enrichment/restitution.

Continue Reading “Are You Guys Into Crypto???”: Celebrities Promoting Cryptocurrencies Become Class Action Targets