Finally, there is the problem of selective enforcement. The internet has generated countless places in which people are promoting investments of various kinds. The growth of meme stocks set off in Reddit chat rooms is the latest example of the phenomenon. The price distortion caused by manipulators in these places is far greater than the impact of a bogus cryptocurrency. Ms. Kardashian’s celebrity prosecution makes good headlines, but it is unlikely to matter much in terms of the market. The jurisdictional limits of the SEC allow it to go after her and Floyd Mayweather, while Matt Damon’s Super Bowl ad for Crypto.com, part of a $65 million campaign, escapes enforcement because it was promoting a platform and not a security.
The SEC has more important tasks than taking on Kim Kardashian’s Instagram feed. If people are duped into betting on a crypto asset because she liked it, the SEC is unlikely to prevent them from making bad choices with their money. More important, bringing high-profile cases only makes matters worse by giving a false air of safety to unsafe investments. Investors and the SEC alike would be better off if we ignored Ms. Kardashian.
‘Enforcement 40’ for 2020
Join Us On LinkedIn
Join the Securities Litigation and Enforcement Group on LinkedIn