Saturday, 28 January 2023

Crypto News

The SEC should be aiming at Do Kwon — But it’s getting distracted by Kim Kardashian

The SEC should be aiming at Do Kwon — But it’s getting distracted by Kim Kardashian

In less than a week, Terraform Labs founder Do Kwon’s passport will expire. Interpol issued a red notice for Kwon last month, and this month, his assets were reportedly frozen by the South Korean government. 

Kwon has been tweeting freely in response — and almost always denies the reports. “I don’t know whose funds they’ve frozen, but good for them, hope they use it for good,” he wrote in one message. Playing a game of cat and mouse with both the authorities and the public, Kwon seems to be living a life of freedom while enjoying his internet access.

Meanwhile, regulators with the United States Securities and Exchange Commission have been highly vocal in reprimanding Kim Kardashian and other celebrities for shilling assorted cryptocurrency projects. Although they deserve to be rebuked, bad actors like Kwon continue to elude the long arm of regulatory bodies.

Kim Kardashian shilling crypto is the tip of the iceberg

Kardashian promised the SEC she’d pay a $1.26-million settlement after promoting EthereumMax (EMAX) on her Instagram account. Rightfully, the reality star was penalized because she failed to disclose the $250,000 she was paid to shill the shitcoin, which plummeted 98% shortly after her endorsement. (She disclosed that she was paid but not the exact amount.)

Following the court ruling, SEC Chairman Gary Gensler proclaimed, “This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it doesn’t mean that those investment products are right for all investors.” He added that the case was “a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”

Related: Kim Kardashian’s Ethereum Max ad violated the SEC’s anti-touting provision

Fine words indeed. But Gensler’s grandstanding with celebrity wrist-slapping is a case of style over substance. Clear pump-and-dump schemes shouldn’t go unpunished, but the priorities of regulatory bodies are clearly skewed. There are far bigger fish in the crypto pond that should be incurring the SEC’s wrath.

The damage caused by Do Kwon

Kardashian touting EMAX isn’t a great look for crypto, and the SEC was right to charge her. But it’s not a patch on the damage done by Kwon, which the SEC failed to avert. The May collapse of Terraform’s stablecoin and its cryptocurrency, LUNA, wiped roughly $50 billion in value out of…

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