Kim Kardashian SEC charges have influencer marketers on edge

Unless you’ve somehow managed to avoid matching with a crypto fiend on Hinge recently, you’ve probably heard about Kim Kardashian’s recent SEC charges.

But in case you need a recap, here’s what went down: Kim Kardashian agreed to pay a $1.26 million fine to the SEC for failing to disclose that EthereumMax paid her $250k to promote the coin—which the SEC deems a crypto asset security—on Instagram.

Kardashian’s settlement could cause marketers working on crypto-related brands or campaigns to be more buttoned-up when working with influencers, especially as regulation of cryptocurrency ramps up and definitions in the space—like which coins are considered securities by the SEC, for instance—aren’t always clear.

Three marketers Marketing Brew spoke to said that they’re going to be extra careful about dotting their I’s and crossing their T’s when it comes to influencer requirements for crypto posts—whether they’re explicitly mandated by the platforms and government or not.

Walking on eggshells

Brad Michelson, eToro’s head of US marketing, told us that Kardashian’s SEC settlement was a “wake-up call” for both marketers and influencers. “What we’re learning more and more as marketers in this industry is that you have to be even more careful than some brands are,” he said.

Michelson said he’d be sure to continue looping eToro’s compliance counterparts into the strategy process from “beginning to end” and be very straightforward with influencers about regulations and expectations.

“That’s the point that regulators are trying to get across here: They’re really serious about these laws. They’re not just guidelines, these are actually enforceable rules,” Michelson explained. “That’s the signal that they’re sending out to the industry right now,” he said, adding that “it’s a statement by their side.”

He noted that this is something his team will “certainly” be talking about ahead of their next round of influencer campaigns, although he said it’s hard to say right now if they will hold off on continuing influencer efforts as a result.

Craig Elimeliah, chief experience design officer at VMLY&R, who told us he’s helped create NFTs for companies like Goldfish and Under Armour, said he would “definitely think twice” about using influencers for any sort of crypto campaign after hearing about the settlement.

“As a creative lead, I would probably steer my teams away from using influencers for a crypto campaign…just because there’s so many unknowns,” he explained.

Elimeliah added that he’d feel more confident if crypto were a field with more experienced legal counsel available. “If I had legal counsel that had, like, 25 years experience, knowing all of the loopholes and what you can and cannot do, I might feel a bit more confident,” he said.

Eric Dahan, CEO and co-founder of Open Influence, an influencer marketing company that has worked on Web3 projects such as SoFi’s crypto platform, said that the news has created “a heightened sense of awareness” for crypto marketers, especially those working on larger-scale projects.

Between Kardashian’s settlement and other celeb-crypto-SEC settlements over the past few years, some marketers might be less inclined to work with celebrity influencers in the sector, Dahan mused.

“I think it’s definitely making influencers and celebrities that are not in the crypto world think twice about getting into it,” he told us.

Through the looking glass

A few crypto marketers we spoke with are in favor of more disclosure, explaining that it could potentially add more transparency to the space.

“It puts a new variable into the market,” Michelson said. For instance, if one crypto brand sees that a competitor paid an influencer $100k, and it had assumed the influencer needed $300k for a post, that could impact payment for future deals.

Disclosing exact amounts of money “could drive more authenticity into these partnerships,” Michelson added. “It also adds in a variable of whether the influencer is just taking the paycheck or if they actually care about that brand.”

Elimeliah said it’s possible to have some fun when disclosing specifics about crypto partnerships in influencer posts.

He pointed to the pharmaceutical industry as an example, saying that some ads have been able to include disclosures in a fun way. “In the land of pharma, there have been some attempts for creative swipes at the regulatory language that you have to attach to a certain thing,” he said, adding that he thinks the challenge is “quite provocative” and something he’s familiar with after working on the Pernod Ricard account.

“It’s not the first time we’ve seen it, right? Cigarettes, alcohol, gambling—they all come with their challenges of what you can and cannot say,” Elimeliah said.