Kim Kardashian fined $1.3 million over crypto 'pump & dump': What Bollywood celebs can learn from the case
Kim Kardashian fined $1.3 million over crypto 'pump & dump': What Bollywood celebs can learn from the case
Reality TV star Kim Kardashian’s crypto ‘pump and dump’ – the Instagram story for which she was fined $1.3 million by the Securities and Exchange Commission (SEC), disclosed that she was paid to endorse the token. Her story includes ‘#ad’ and also clarifies that Kardashian, in no way, is giving out financial advice. It is therefore all the more surprising why the reality star was fined since due diligence was done on her part – or so it seems. “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,” said SEC Chairperson Gary Gensler. Kardashian agreed to pay the fine and agreed to not endorse crypto assets for another 3 years.
Do celebrities – especially those on Instagram, try all the products they endorse? Probably not. Is it their responsibility to declare in the Reel/post if their post is sponsored? Yes. Why, then, was Kim penalized for her story? Perception is everything. It is clear that the SEC wanted to make an example out of Kardashian to make sure other celebs and social media influencers don’t endorse crypto assets or shady schemes which often crash and leave investors, some of whom are also fans of these celebrities, with empty pockets.
Bollywood stars & their crypto romance
Closer to home, in India, crypto continues to be an unregulated and frankly, an untamed giant. As far as the legality is concerned, the lines are blurred. However, Bollywood bigwigs – from Amitabh Bachchan, Salman Khan to Sunny Leone all seem to have endorsed a crypto coin, trading platform or at the very least, an NFT. This, despite Securities and Exchange Board of India (SEBI) suggesting ‘prominent public figures, including celebrities, sportsmen’ to not endorse crypto assets.
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It is important to mention that as of date, crypto is not regulated and has been named as virtual digital assets (VDA) for taxation purposes only.
This doesn’t really stop Ranveer Singh from playing a rapper inspired by Gully Boy and appearing in ads advising young boys to trade in crypto. Or an Ayushmann Khurrana who plays a guy-next-door in commercials telling investors that their money is safe in their crypto wallets. Advertising Standards Council of India (ASCi), in 2022, advised celebs to do ‘due diligence’ and ‘circumspect’ before endorsing crypto assets. It remains unknown if Ranveer or Ayushmann have invested in crypto themselves. It would, of course, be problematic for the actors to endorse crypto and urge their fans to buy it if they are wary of investing in crypto themselves.
Instagram influencers and due diligence
It is important to note that Kardashian was fined by the SEC only after the EthereumMax investors filed a complaint against Kim and EMAX founders. Back home in India, where fighting a legal battle is expensive and exhausting, one cannot really expect a crypto investor who lost money after investing in a crypto scam to take Ranveer or Ayushmann to court. With India’s low per-capita income, middle-class families barely have enough money to survive and hiring a lawyer to bust a crypto scam, especially since RBI and SEBI have repeatedly advised against investing or trading in crypto, is futile. With the crypto winter setting in, the doubts over the future of the digital currency are also increasing. It is, therefore, of paramount importance that Bollywood is extra careful when it comes to brand endorsements – especially with cryptocurrency.
The problem, however, is not just the Bollywood stars. According to data released by ASCI, influencers are behind 92% of crypto-related advertisement violations. The data analysed complaints between January 2022 and May 2022. ASCI said “most of the influencer ads were a mix of breaching ASCI’s influencer guidelines and crypto guidelines in advertising” and while some of the ads are still in the compliance stage, an overall compliance rate of 77% has been achieved.
The headline of a story in Quartz India reads, “Indian social media influencers are marketing cryptocurrencies like soap and shampoo”. If true, the statement is of grave concern because unlike shampoo or soap, crypto investments – especially if it is from a shady source, can end in a scam and loss of money.
All in all, the likes of Ranveer, Ayushmann or Amitabh Bachchan have very little to lose by endorsing crypto. The general public though, especially the middle class families who invest in such schemes with little knowledge of how crypto works, have much more at stake. The unclear and frankly vague guidelines by ASCI (none of its regulations are legally binding) or SEBI don’t help the cause either.
As the old adage goes ‘if you play with fire, you’ll get burnt’. For the time being, while crypto isn’t regulated or legally recognized in India, both celebs and investors must do their homework before they venture into crypto.
Deepansh Duggal is an entertainment, pop-culture and trends writer based in New Delhi. He specializes in op-eds based on the socio-political and gender issues in the world of entertainment and showbiz. He also writes explainers and occasionally reviews shows in the OTT space. He tweets at @Deepansh75.
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