Memecoins
Caitlyn Jenner Releasing Meme Coin Is Riskier Than Kim Kardashian Shilling Ethereum Max, Legal Experts Say
A bevy of celebrity-backed meme coins have recently captured the cryptocurrency zeitgeist, but experts say they may face greater legal risks than past enforcement actions.
The US Securities and Exchange Commission (SEC) has already targeted celebrities for promoting cryptocurrencies on social media, a list that notably includes Kim Kardashian, the famous 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 may face greater legal consequences than Kardashian, securities law lawyers said Decipher. In essence, Jenner could be seen as both a broadcaster AND a promoter, not just a fee paid.
When the SEC revealed charges against Kim Kardashian in 2022 for her promotion of Ethereum Max, unrelated to the second largest cryptocurrency regulator claimed the entrepreneur’s social media activity violated the “anti-promotion provision of the federal securities laws.”
The only thing Kardashian did wrong was not disclose the $250,000 compensation she received for her promotion, said Philip Moustakis, who previously worked as a senior counsel in the SEC’s Division of Enforcement, and is now partner of Seward & Kissel LLP.
Without admitting or denying the SEC’s allegations, Kardashian paid $1.26 million to settle the SEC’s claims: of that amount, Kardashian agreed to pay $1 million in penalties, as well as approximately $260,000 in disgorgement.
“Disgorgement is that [Kardashian] I got 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 severity of the exposure, and then it’s the severity of the conduct.”
Launched via pump.fun, the Solana protocol that allows anyone to instantly launch a tradable token for just a few dollars in cryptocurrency, Jenner says he does not have custody of any JENNER tokens on Solana.
According to a separate group of digital wallets that held more than 25% of JENNER’s supply at launch, the tokens sold for around $500,000 in other coins. analytical from Bubblemap. Earlier this week, Jenner’s Twitter account claimed that she had purchased more JENNER and that she will be “always optimistic.”
Even though Jenner is “happy with the growth“So far of its Solana-based meme coin, the asset has faced difficulties following the launch of its Ethereum-based counterpart. Jenner’s value on Solana has fallen 60% since Monday to $0.00672251.
This was said by his former business partner associated with the launch of Solana Decipher That is not associated with Jenner’s Ethereum-based token.
While Jenner’s role in launching the meme coins may be distinguished as part of the issuance team, her promotional statements could still land her in trouble, said Arthur Jakoby, a partner at law firm Herrick Decipher.
“The promotion issue still stands,” he said. “This is actually riskier [than what Kim Kardashian did] because they can be accused of soliciting unregistered collateral.
Giving the public instructions on how to purchase a good, perhaps by 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, she continued, and could include mass Internet marketing.
“It’s sad that these things still happen, but it happens for a reason,” he said. “People feel that having some sort of celebrity involved in the project will attract more people.”
As for Kardashian, the SEC generally sees value in pursuing enforcement actions that will attract widespread public attention, Moustakis said. That’s especially true if the agency believes the enforcement action will change market behavior for the better, he added.
“A 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, in some ways, at greater risk when making public statements, marketing and promoting their tokens.”
By Ryan Ozawa.