Sometimes it seems the odds are stacked against companies when it comes to regulation from the SEC. Governments across the world can levy strict fines that damage a company’s bottom line and reputation. And this fact isn’t lost on celebrities who own or invest in Bitcoin, NFTs, or other digital assets.
Yet recently, high-profile figures have been getting off easier than companies for their actions. Celebrities get a slap on the wrist while companies face the full wrath of harsh regulatory action.
If the US government is committed to equality under the law–and if corporations are people too–then why is the SEC fining people differently?
Corporate vs. Celebrity Punishments
Corporations and high-profile individuals are often in the news for fines and punishments they receive. Social media has made it easier to bring attention to a variety of topics. From phony promotions and scams to fraud in banking or healthcare, exploits can have devastating consequences.
Regulators are getting increasingly strict when handing down punishments against both corporations and celebrities for any type of illegal activity. Penalties range from hefty fines to jail time and even longer-term bans on conducting business. These punishments aim to make sure that those who break the law will no longer be able to engage in shady dealings without repercussions.
Companies Pay Hefty Fines
In recent years, big corporations have faced large fines due to what some might consider shady practices. Insider trading, securities fraud, and misuse of cryptocurrency and NFTs have resulted in fines. These violations of trust, when found out, end up costing the companies dearly in regulatory action and consumer confidence alike.
Crypto service provider BlockFi agreed to pay $100 million in penalties after the SEC charged it with “failing to register the offers and sales of its retail crypto lending product.” It also failed to comply with the registration provisions of the Investment Company Act of 1940. This case was the first of its kind, which leads one to wonder. Was the punishment intentionally harsh so as to send a message to the industry?
This January, the SEC charged Genesis and Gemini for the “unregistered offer and sale of crypto asset securities.” Customers could loan their crypto assets to Genesis and earn interest for doing so. However, the Gemini Earn Lending program failed to maintain enough liquidity. Hence, many investors could not (and still cannot) withdraw their funds. Again, this program was not registered with the SEC.
Then a few days later, Nexo agreed to pay $45 million in penalties for an offering similar to Gemini’s. It also had to promise to stop its “unregistered offer and sale” of its Earned Interest Product (EIP).
Celebrities vs. the SEC
Last October, the SEC fined Kim Kardashian $1.26 million for failing to disclose an endorsement from EthereumMAX. According to the SEC, her actions qualified as a violation of federal securities laws. But even before the SEC got involved, some investors accused Kardashian of artificially inflating the value of the asset.
And just this March, the SEC hit eight celebrities including Lindsay Lohan and Jake Paul with similar charges. Even worse, crypto entrepreneur Justin Sun allegedly told the celebrities not to disclose his endorsements. Given that his tokens were the assets in question, the problem was obvious, and the SEC walked right in. But even in this case, the SEC fined these celebrities even less than Kim Kardashian.
Is Justice Blind?
Obviously many factors go into how the SEC metes out justice. The size and scope of the violation, the intentions behind the action, and the harm caused all play a role. But there appears to be a huge difference between what the SEC thinks is wrong, and what the SEC thinks is unlawful.
In the case of BlockFi, the firm failed to register activity under a law that did not clearly include them. This could have been an honest mistake due to the ambiguity around what the SEC thinks of as crypto. On the other hand, these celebrities knew that hyping an asset in exchange for payment is a conflict of interest. Or if they didn’t know, they should have.
Justice from the SEC can be a mercurial thing at times. It’s more complex than simply weighing up the size of the violation and how much harm was caused. What it seems to hinge on is whether the SEC holds a given action to be unlawful, even if it could have happened in good faith.
It can be unnerving to see that celebrities are often getting away with more than large companies. Unfortunately this is not a new phenomenon. Although traditional legal systems have failed to apply fair punishments on both sides, there are still steps we as citizens can take to push for justice.
Protesting decisions made by governments and courts, and petitioning politicians and lawmakers to hold people accountable, can be ways for individuals to make a difference. We need to strive for education on both sides so that everyone can better understand their own advantages and disadvantages. Honesty must be foremost from the beginning in order for this plan to work. Transparent contracts, open communication of expectations, and collaboration are all necessary steps to that end.
Through collective efforts, we can work together towards a brighter future. Ideally, it will be one that holds both celebrities and corporate cultures equally responsible for their actions. As long as we do our part, perhaps one day we will finally reach a place of fairness and justice.
One of the biggest issues surrounding celebrities and companies today is finding a way to find equality under the law.
Following the Trust Project guidelines, this feature article presents opinions and perspectives from industry experts or individuals. BeInCrypto is dedicated to transparent reporting, but the views expressed in this article do not necessarily reflect those of BeInCrypto or its staff. Readers should verify information independently and consult with a professional before making decisions based on this content.
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