What do Kim Kardashian, Floyd Mayweather, and CNN have in common?
A: They’ve been accused of either committing or aiding and abetting rug pull scams.
In a prior post, my colleague Chih-Hsun (Tim) Lin discussed rug pulls in the context of NFTs. Similarly, in the context of cryptocurrency, rug pulls are scams in which a creator or team of creators of inflates the value of their token before disappearing with the funds, leaving their investors with tokens that are worthless.
You may have seen earlier this month that the Securities and Exchange Commission (SEC) announced charges against Kim Kardashian, the reality TV star and influencer, for her Instagram post promoting EthereumMax (EMAX). While Kim K’s post included the hashtag #AD, which is part of an initiative by the social media platform to make users aware what posts are sponsored content, she failed to disclose that she received $250,000 to publish the post, and according to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, the hashtag was insufficient to satisfy federal securities laws that require “any celebrity or other individual who promotes a crypto asset security [to] disclose the nature, source, and amount of compensation they received in exchange for the promotion.” To settle the case, Kim K. agreed to pay the SEC $1.26 million and agreed to refrain from promoting any cryptoasset securities for three years.
This agreement to refrain from promoting cryptoasset securities has been…
