Earlier this week, the US Securities and Exchange Commission (SEC) charged and settled a lawsuit with socialite and billionaire Kim Kardashian for allegedly withholding information about the EthereumMax promotion. The influencer received $250,000 in compensation for driving her 330 million Instagram followers to a website where they could have purchased the cryptocurrency.
The Commission received criticism for the case against Kardashian, the socialite agreed to pay $1.4 million according to her settlement and stop promoting crypto for 3 years. In the mainstream media, the agreement between the parties was called a “slap on the wrist”, while others criticized the SEC’s possible overreaching of its oversight.
SEC insiders expressed displeasure with Gensler and EthereumMax Case
According to report by FOX’s Charles Gasparino, there have been some critics within the SEC’s own ranks. Some members of the regulator’s staff have complained about the settlement, a possible violation of Commission protocol by Chairman Gary Gensler and the public events surrounding the case.
As news of the lawsuit and settlement broke in the media, SEC Chairman Gensler gave an interview on CNBC’s Squaw Box discussing the case and other details related to the case. Additionally, the regulator’s official Twitter handle retweeted a video uploaded from Gensler’s account explaining how Kardashian “illegally” promoted a “crypto security.”
I will be on @CNBC at 8 a.m. to discuss our most recent case study and what investors should consider when viewing celebrity endorsements of investment products. Tune in!
— Gary Gensler (@GaryGensler) October 3, 2022
The case was brought by Gensler and other high-ranking SEC officials as a way to draw more attention to similar cases in which an influential celebrity uses a platform to promote investments that are potentially harmful to the average person.
However, Gasparino claims some SEC staff believe the case was mishandled and used by Gensler as an opportunity to take credit and pull a “publicity stunt.” The FOX reporter said:
They call it a “publicity stunt” designed to hard-wire their representative to be named Treasury Secretary. They also say Gensler snuck up on CNBC for his appearance and created a video about the deal, an unusual move for chairs who typically allow staff to take credit for actions and pursue broader issues.
The EthereumMAX case highlights the SEC’s internal problems
In addition, Gasparino claims that Gensler has had “scuffles” with the SEC’s enforcement department. This has led many law enforcement officers to leave the Commission because they do not agree with the “management style and workload” of the Chair.
According to Gasparino, the regulator has been addressing “non-traditional areas of application” such as ESG and crypto corporate mandates. In this regard, Gensler has asked for more staff, budget and power to take control and regulate assets that they classified as “crypto-securities”, such as EthereumMax.