Kim Kardashian could be ‘tip of the iceberg’ for celeb crypto crackdown

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Kim Kardashian’s $1.26 million fine from the Securities and Exchange Commission could just be the first shot in a broader regulatory volley against crypto-hawking celebrities, experts tell The Post. 

A-listers including Matt Damon, Tom Brady and Larry David, who appeared in ads for cryptocurrency exchanges during this year’s Super Bowl — as well as stars like Mike Tyson and Reese Witherspoon who participated in so-called NFT drops — could be casualties of a crypto crackdown from the SEC. 

“This is a litigation strategy of going after public figures — now everyone in Hollywood will notice,” Columbia Law professor and securities expert John Coffee told The Post. “[SEC Chair] Gary Gensler isn’t afraid of publicity.” 

To be sure, celebrities have been selling goods on QVC and informercials for decades before Instagram or cryptocurrencies even existed. But lawyers caution that pushing financial products is far thornier than shilling for skincare products or clothing. 

“Celebrities aren’t thinking through the fact that cryptocurrencies may be governed by securities laws”, former SEC enforcement attorney Ron Geffner told The Post, calling the Kardashian news the “tip of the iceberg.” 

“There are far more wide-reaching implications for celebrities and influencers in dealing with securities and the laws about regulating securities than other industries,” Geffner added. 

matt Damon
Matt Damon has starred in commercials for crypto exchange FTX.

Kardashian’s flagrant promotion of an individual crypto token was effectively low-hanging fruit for regulators, experts said. But celebs who promoted sites like Crypto.com and FTX — where customers can trade a wide swath of cryptocurrencies — could also be targets, according to crypto expert and London School of Economics visiting fellow Garrick Hileman. 

“I would wonder whether that’s the next frontier,” Hileman said of targeting celebs for promoting exchanges. 

Gensler has said many cryptocurrencies are operating as “unregistered securities” and the SEC could therefore interpret celebs who promote sites for trading the digital coins as violating securities laws, Hileman said.

He added that David, Damon and Brady should be “worried” about the Kardashian news. 

“There’s a reputation hit which comes with winding up in the SEC’s crosshairs,” he said.

Giselle and tom Brady
Gisele Bündchen and Tom Brady have embraced cryptocurrency — appearing in ads for FTX.
FTX

Lawrence Cunningham, a law professor at George Washington University, called on the SEC to do more to target celebrities who promote cryptocurrencies. 

“The greatest risk ordinary American investors face is from manipulative schemes and the SEC’s primary statutory mandate is to mitigate those risks by policing fraudsters,” Cunningham told The Post. “Picking one celebrity as the showcase and highlighting her failure to disclose payments does not reflect a robust enforcement program.”

Representatives for Witherspoon, Damon, David and Tyson did not immediately respond to request for comment.

In one sign that celebrities could be backing off affiliating themselves with cryptocurrencies, some insiders pointed to a bizarre event with actress Charlize Theron at a cryptocurrency conference last Thursday.

During crypto firm Circle’s Converge22 conference in San Francisco, Theron participated in a question-and-answer session with Circle’s global head of policy, Dante Disparte. Despite the fact that Theron was speaking with the executive of a crypto company at a crypto conference, the Q&A did not touch on cryptocurrencies or the blockchain at all, instead centering around Theron’s life story and charity work. 

The conversation left the audience full of crypto fanatics scratching their heads. 

“I have to wonder whether her lawyers said: ‘We can’t talk crypto,’” said Hileman, who attended the conference. 

Theron didn’t respond to a request for comment.

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