🚩 SEC Fines Kim Kardashian $1.26M Over Crypto Ads (full story)

This is The Level Ups. Modern business news for the future business leader (in plain-Jane English).

Today:

• SEC fines Kim Kardashian $1.26M over a crypto ad.

• But many celebs push crypto. Why fine Kim?

• How will this affect other celebs doing the same?

• Celsius publicly releases personal information on 600K+ customers.

Let’s get into it.

Because this is about crypto, here’s the disclaimer.

None of this is financial advice. Please consult your financial advisor for a professional opinion on handling your money. This is just my personal opinion. Again, not financial advice.

Estimated reading time: 3 minutes & 55 seconds

Kim K & The Fine:

The SEC issued a $1.26M fine, and Kim's agreed to pay it. It’s obviously not much to her.

This was the ad to “join the E-MAX community.”

She’s not the only one. Professional boxer Floyd Mayweather and NBA Hall of Famer Paul Pierce are also in separate lawsuits over the same scam.

They allegedly promoted E-MAX as part of an investment scheme.

Let’s start there:

How The Scam Works:

The “insiders” (the creators and their friends) purchase millions of tokens for pennies.

Then, they hire A-list celebrities like Kim to promote it to their audience. Her ad went to 250M IG followers.

People fell for it and bought E-MAX because influencer marketing works.

The token price increased because of all the new buyers getting in on the action (demand was up).

Then, the insiders sell all their stock after it's increased and collect their gains.

The Classic “Pump & Dump.”

This is called a "pump and dump" scheme. It’s a scam that works with other assets (like stocks).

The ads generate demand, which creates a “pump,” so the price increases. The insiders then “dump” it and make fortunes.

Note: the line is crossed when the information is false, and the publisher knows it.

The SEC clearly believes Kim was in on it. She paid the fine (not denying it).

It’s not always big celebrities who do this, btw.

Ever had a “friend” sell you on a random token? Then deny everything once the price drops? There’s a chance they were scamming you just like this.

There's a reason people do this. It's a lot of money.

The Numbers:

It worked.

E-Max was at $0.000000000735496 on May 26, 2021 (the day of the posts).

It jumped to an all-time high of $0.000000597636 by May 31.

That’s an increase of 81,156%.

If Kim were in for $100K, she would have walked away with over $81M. It's not a typo. Note: that's only if she dumped at the right time.

Makes the $1.26M fine look like a joke, doesn’t it?

So Many Celebrities Do This, Why Did The SEC Fine Kim?

She’s not the only one who’s been fined over alleged crypto scams. Crypto Vantage has a list. It’s oddly short.

• Actor Steven Seagal

• Rapper T.I

• Boxer Flloyd Mayweather

• DJ Khaled

• Basketball player Paul Pierce (tbd).

That’s it. Short list isn’t it?

But still, why Kim?

It’s Because She’s That Big:

Kim Kardashian is one of the highest-profile celebrities in the world. Whether you like it or not, she has major influence.

Nobody cares that Steven Seagal was fined because he's not a big deal. Kim is all over news headlines, and social media algorithms love her.

When it's Kim Kardashian, the world knows about it.

This fine the first punch; the SEC wants everyone to see it. It may not be the whole story, but it's obvious.

Not sure celebs will care when seeing things like 81,000% gains.

But now you’re probably wondering: why aren’t more celebrities being fined for this? (Or getting more than just a fine)?

All These Scams, But So Few Fines, What Gives?

Crypto is relatively new, and it seems like the SEC is slow to catch up to what’s happening.

Targeting Kim is a way of showing the world how the SEC is “doing something about crypto.”

It adds up.

• SEC is under pressure for not doing anything.

• They’re very slow anyway.

• So they issue one fine to the highest profile celebrity they can target.

• The minimum amount of work to make the biggest impact.

I bet this is how many young Americans have learned there's an SEC in the first place.

Again, I'm not an expert. Just here to point out exactly what it looks like.

To be fair, it’s not just the SEC.

The chairman of the Financial Conduct Authority, which oversees 51,000 businesses in the United Kingdom, called her out by name in a speech last month.

It was his way of pushing for more rules around tokens and social media ads promoting cryptocurrencies.

I’m not sure all this will deter celebrities from schilling crappy tokens. At least not yet.

If That Doesn’t Scare Crypto People, The Celsius Release Will:

Celsius is now bankrupt. But, before going bankrupt, it was a platform to buy, sell, trade, and hold crypto assets. One of the big ones.

Companies go bankrupt all the time (especially these days). But this one hit home for many crypto investors. One, in particular, lost $40M. Yikes.

It gets worse.

The bankruptcy court released a 1400+ page document with all the details as part of the process. In it, data for all their users were also released.

I went through it. The list starts on page 34.

Names, balances, transaction IDs. Everything. Every single Celsius user can now be doxxed by looking at the documents.

There's also a site where you can enter someone's full name and see exactly how much they lost on Celsius. Oof.

The thing is, it’s not a “leak” because it’s actually part of the process to release this info.

Do you trade crypto and value your privacy? Pay attention.

If the crypto company you work with goes under, all that info goes public.

Funny enough, before the bankruptcy filing, the top execs pulled out $17M in assets. Looks like some people want to get paid out before their customers.

Wrapping Up:

Tough run for crypto. Maybe things will turn for the better soon. Who knows.

But one thing’s for sure. Where there are new, extremely lucrative opportunities, there are scammers. Stay sharp!

Thanks for reading.

See you tomorrow,

Darwin