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On the surface, the news that Kim Kardashian will pay $1.26 million to resolve charges filed by the Securities and Exchange Commission for touting a cryptocurrency without disclosing the nature, source, and amount of the compensation she received means nothing to the NFL. It should, however, raise red flags for NFL players who are or will be promoting crypto.
From the SEC’s release: “Ms. Kardashian’s case . . . serves as 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. . . . The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion.”
The NFL’s most visible crypto endorser is Buccaneers quarterback Tom Brady. Although Brady doesn’t push a specific currency, he promotes FTX, a platform for buying and selling cryptocurrencies.
The deeper question relates to the jurisdiction of the SEC when it comes to crypto. The CEO of FTX has been trying to steer the regulation of crypto to the Commodity Futures Trading Commission instead of the SEC, apparently because the CFTC has less stringent rules.
The SEC’s release regarding Kardashian specifically states that she touted a “crypto asset security” without disclosing the amount and source of the compensation. (She received $250,000 for an Instagram post regarding EMAX tokens, sold by EthereumMax.)
Again, Brady promotes the FTX platform, not a specific cryptocurrency. But he clearly has skin in the crypto-buying game, based on his general arrangement with FTX. And if the FTX CEO is hoping to avoid SEC regulation, Brady presumably would like to do so, as well.
Regardless of how it plays out, the situation has the SEC’s attention. As noted in the release, Kardashian has agreed to cooperate with the SEC’s ongoing investigation. Thus, the seven-figure payment made by Kardashian seems to be more beginning than end. And as Brady approaches the end of his career, he could potentially face the beginning of issues arising from his promotion of FTX without disclosing how much he’s specifically paid to do so.
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