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Caitlyn Jenner Launching a Meme Coin Is Riskier Than Kim Kardashian Shilling Ethereum Max, Legal Experts Say
A bevy of celebrity-backed meme coins have captured the crypto zeitgeist recently, but experts say they may be running greater legal risks compared to past enforcement actions.
The US Securities and Exchange Commission (SEC) has previously targeted celebrities for promoting cryptocurrencies on social media – a list that notably includes Kim Kardashian, the celebrity businesswoman and stepdaughter of Caitlyn Jenner. And Jenner this week launched meme coins on Solana and Ethereum named after the Olympic gold medalist.
To the extent that Jenner’s meme coins are unregistered securities, she could face greater legal consequences compared to Kardashian, lawyers specializing in securities law said. Decrypt. In essence, Jenner could be seen as both an emitter It is a promoter – not just a paid extra.
When the SEC revealed charges against Kim Kardashian in 2022 for her promotion of Ethereum Max – unrelated to the second-largest cryptocurrency – regulators claimed the businessman’s social media activity violated the “anti-advertising provision of federal securities laws.”
The only thing Kardashian did wrong was not disclosing the $250,000 in compensation she received for her promotion, said Philip Moustakis, who previously served as senior counsel in the SEC’s Division of Enforcement and is now a partner at Seward & Kissel LLP.
Without admitting or denying the SEC’s charges, Kardashian paid $1.26 million to settle the SEC’s claims: Of that amount, Kardashian agreed to pay $1 million in fines, plus about $260,000 in restitution.
“Degorgement is how much [Kardashian] was paid for advertising, which in most cases will be substantially less than […] a full capital raise by someone else issuing a token,” Moustakis told Decrypt. “It’s the seriousness of the exposure and then the seriousness of the conduct.”
Launched through pump.fun – the Solana protocol that allows anyone to instantly launch a tradable token for just a few dollars in crypto – Jenner claims he had no custody of any JENNER tokens on Solana.
A separate group of digital wallets that held more than 25% of JENNER’s supply at launch later dumped the tokens for around $500,000 in other coins, according to analysis from Bubblemaps. Earlier this week, Jenner’s Twitter account stated that she had purchased more JENNER – and will be “always optimistic.”
Even though Jenner is “happy with the growth” From its Solana-based meme coin to now, the asset has encountered headwinds following the launch of its Ethereum-based counterpart. Jenner’s value on Solana has plummeted 60% since Monday to $0.00672251.
His former business partner associated with the Solana launch said Decrypt what he is not associated with Jenner’s Ethereum-based token.
While Jenner’s role in the meme coin launches may be distinct as part of the issuing team, her promotional statements could still land her in hot water, said Arthur Jakoby, a partner at law firm Herrick. Decrypt.
“The disclosure still applies,” he said. “This is actually more risky [than what Kim Kardashian did] because they could be accused of applying for an unregistered title.”
Giving instructions to the public on how to buy an asset – perhaps, posting a link where it could be purchased – could be considered a solicitation, Jakoby said. This doesn’t have to be targeted advertising per se, he continued, and can include mass marketing over the Internet.
“It’s sad that these things are still happening, but they’re happening for a reason,” he said. “People think that having some kind of celebrity involved in the project will attract more people.”
Regarding Kardashian, the SEC typically sees value in initiating enforcement actions that will attract broad public attention, Moustakis said. This is especially true if the agency believes enforcement measures will change market behavior for the better, he added.
“A publicized case against Kim Kardashian is going to get a lot more attention than one against someone you’ve never heard of,” Moustakis said. “Celebrities are somewhat at greater risk when they make public statements, market and promote their own tokens.”
Edited by Ryan Ozawa.