Earlier this week, the U.S. Securities and Exchange Commission (SEC) charged and settle a lawsuit with socialite and billionaire Kim Kardashian for allegedly withholding information about promoting EthereumMax. The influencer received $250,000 as compensation for leading her 330 million Instagram followers to a website whey they might have purchased the cryptocurrency.
The Commission received critics for the case against Kardashian, the socialite agreed to pay $1.4 million as per her settlement and to stop promoting crypto for 3 years. Across mainstream media, the settlement between the parties was called a “slap on the wrist”, while others criticized the SEC’s potential overreach of its oversight.
SEC Insiders Expressed Discomfort With Gensler And EthereumMax Case
According to a report from FOX’s Charles Gasparino, there have been some critics within the SEC’s own ranks. Some members of the regulator’s staff have been complaining over the settlement, a potential violation of the Commission’s protocol by Chairman Gary Gensler, and the public events surrounding the case.
As news about the lawsuit and settlement broke across media outlets, SEC Chair Gensler gave an interview to CNBC’s Squaw Box discussing the case and other details related to the case. In addition, the regulator’s official Twitter handle retweeted a video uploaded from Gensler’s account explaining how Kardashian “unlawfully” touted a “crypto security”.
I’ll be on @CNBC at 8am to discuss our most recent enforcement case and what investors should consider when they see celebrity endorsements of investment products. Tune in!
— Gary Gensler (@GaryGensler) October 3, 2022
The case was presented by Gensler and other SEC high-ranking officers as a way to bring more attention to similar cases where an influencer celebrity uses a platform to promote investments potentially harmful to the average person.
However, Gasparino claims that some SEC staff members believe the case was mishandled and used by Gensler as an opportunity to take the credit and pull a “publicity stunt”. The FOX reporter said:
They are calling it a “publicity stunt” designed to burnish his rep to be named Treasury Secty. They also say Gensler stealthily approached CNBC for his appearance & created a video on the settlement, an unusual move for chairs who usually allow staff to take credit for actions & pursue broader issues.
EthereumMAX Case Highlights SEC Inside Problems
Furthermore, Gasparino claims that Gensler has had “skirmishes” with the SEC enforcement department. This has led many law enforcement agents to leave the Commission as they disagree with the Chair’s “management style and workload”.
According to Gasparino, the regulator has been tackling “nontraditional areas of enforcement”, such as corporate ESG mandates, and crypto. In that sense, Gensler has been asking for a bigger staff, budget, and power to take control and regulate assets that they classified as “crypto securities”, such as EthereumMax.