Kardashian Settlement Will Cool Celebrity Crypto Craze?

Kim Kardashian and Floyd Mayweather
Illustration: VIP+; Kardashian, Mayweather: Getty Images

If the federal government wanted to make an example out of a celebrity failing to disclose payment for promoting a cryptocurrency, you can’t do better than Kim Kardashian.  

Social media’s reigning queen and the Securities and Exchange Commission (SEC) came to a settlement announced Monday in which she agreed to pay a fine of $1.26 million and not participate in any crypto promotions for three years in return for admitting no wrongdoing in connection to touting EthereumMax without specifying the $250,000 compensation. 

This is notable, as it is the highest fine the SEC has levied to date on a celebrity for crypto shenanigans — an indication that the feds were looking to send a signal to other stars willing to play fast and loose with promotional guidelines.  

And it is possible that Kardashian will not have the ignominy of holding the record for largest SEC settlement for long: Boxing legend Floyd Mayweather is in front of the SEC for the second time for endorsing cryptocurrency — with his involvement in EMAX coming almost as soon as his first three-year ban on endorsements was over. Just last week he filed a motion to have a class-action lawsuit tossed out of a California federal court. 

Celebrities endorsing products for cash is nothing new, so it was a natural fit for high-profile stars and influencers to begin endorsing cryptocurrency once the medium took off in 2017. 

The issue then was that many of the cryptocurrency launches, known as Initial Coin Offerings (ICOs), ended up being scams. This resulted in the SEC fining many of the stars involved in publicizing the ICOs, most notably Mayweather, DJ Khaled and Steven Seagal. 

This led to many consumers distrusting cryptocurrencies. Data from VIP+’s “Demographic Divide” report shows that the majority of consumers of all age groups either consider crypto to be a scam or are uncertain about it. 

The knock-on effect of public distrust and uncertainty about the format saw bigger stars turned to during crypto’s second boom of 2020-22. Matt Damon encouraged the public to buy cryptocurrencies in fall 2021, and both Kardashian and Mayweather endorsed the EthereumMax coin in June 2021. 

The latter led to a class-action lawsuit against the celebrities for making misleading statements in their promotions that led to many investing in the coin. It subsequently lost 97% of its June value by January 2022. 

With the government upping the consequences for controversial endorsements, expect there to be a decline in celebs taking the mantle of any old coin once the crypto market heats back up. The "crypto winter" will have put an end to endorsements and ICOs in the short term, but this points to a more regulated arena once the crypto spring blooms anew.