A slew of celebrity-backed meme coins have captured the crypto zeitgeist recently, but experts say they could pose greater legal risks compared to past enforcement actions.
The U.S. Securities and Exchange Commission (SEC) has previously targeted celebrities who promoted cryptocurrencies on social media, including Kim Kardashian, the famous entrepreneur and stepdaughter of Caitlyn Jenner, who this week launched a meme coin named after the Olympic gold medalist on Solana and Ethereum.
To the extent Jenner’s meme coins are unregistered securities, she could face greater legal consequences than Kardashian, said a securities lawyer. DecryptionIn essence, Jenner can be considered a publisher. and They are promoters, not just paid shills.
When the SEC announced charges against Kim Kardashian in 2022 for promoting Ethereum Max (which is unrelated to the second-largest cryptocurrency), the regulator Claimed The entrepreneur’s social media activity violated the “anti-solicitation provisions of the federal securities laws.”
The only thing Kardashian did wrong was fail to disclose the $250,000 she received in compensation for the promotion, said Philip Moustakis, a former senior counsel in the SEC’s enforcement division who is now a partner at the law firm Seward & Kissel.
Kardashian neither admitted nor denied the SEC’s charges and paid $1.26 million to resolve the SEC’s claims, of which she agreed to pay a $1 million penalty and disgorgement of approximately $260,000.
“Disgorgement is [Kardashian] In most cases, advertising fees are […] Someone will issue a token and do some serious fundraising,” Moustakis said. Decryption“It’s the seriousness of the exposure and the seriousness of the conduct.”
The tokens were issued through pump.fun, a Solana protocol that allows anyone to issue instantly tradable tokens for just a few dollars worth of cryptocurrency, but Jenner claims he did not store any of his JENNER tokens on Solana.
A distinct group of digital wallets that held more than 25% of JENNER’s supply at the time of the announcement have since sold off roughly $500,000 of the tokens in other coins. analysis Via Bubblemaps. Earlier this week, Jenner’s Twitter account claimed she had purchased more Jenner, stating that she was “always bullish.”
Jenner said,Satisfied with growthSo far, Solana-based meme coin Ethereum-based Ethereum has faced headwinds following its launch. Jenner’s value on Solana has fallen 60% since Monday to $0.00672251.
“She was a very shy girl,” said her former business partner, who helped start Solana. Decryption that He doesn’t care Uses Jenner’s Ethereum-based token.
While Jenner’s role in the meme coin’s launch may set her apart as part of the issuance team, her promotional comments could land her in hot water, said Arthur Jacoby, a partner at law firm Herrick. Decryption.
“The hype is still good,” he said. “This is actually riskier. [than what Kim Kardashian did] “Because you could be sued for soliciting unregistered securities.”
Giving instructions to the public on how to purchase assets, e.g. Post a link Jacoby said directing people to places where advertisers can sell ads could be considered solicitation. That doesn’t necessarily have to be targeted advertising, and could include mass marketing over the internet, he continued.
“It’s sad that this kind of thing still happens, but it’s happening for a reason,” he said. “People think that by having some kind of celebrity involved in the project, more people will be interested.”
As for Kardashian, Moustakis said the SEC typically sees value in taking enforcement actions that attract widespread public attention, especially if the agency believes that enforcement actions will change market behavior for the better, he added.
“A publicity lawsuit against Kim Kardashian is going to attract a lot more attention than one against someone you’ve never heard of,” Moustakis said. “In some ways, celebrities are at higher risk when they make public statements, do marketing, and promote their tokens.”
Editor: Ryan Ozawa.
