Kim Kardashian’s crypto settlement could be a lesson for us all.
The reality TV superstar agreed to pay $1.26 million to settle charges with the Securities and Exchange Commission for failing to disclose she got paid to publish a post on Instagram about EthereumMax’s crypto asset, the agency announced Monday.
“Clearly the SEC is making an example out of Kim Kardashian, who is the biggest influencer perhaps in the world,” said Douglas Boneparth, a certified financial planner and the president of Bone Fide Wealth in New York.
Celeb pitches may not be ‘right for all investors’
“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” Gary Gensler, chairman of the SEC, said in a statement.
“We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
Gensler also published a video warning investors not to make investment decisions based entirely on the advice of a celebrity or influencer.
“Regardless of where we are hearing this advice, we need to remember what works for one person may not be the right advice for you,” said Ted Rossman, a senior industry analyst at Bankrate.
‘You generally want to do some due diligence’
As the coronavirus pandemic spawned a new generation of investors, Instagram, YouTube and TikTok have become some of the most popular sources for financial information, tips and advice, particularly among Gen Z.
“In the last few years, we’ve seen a large leap in the number of platforms that give people access to investments, which I could say is a good thing,” Boneparth said.
“This used to be a rich person’s game, but now everyone can buy stocks or crypto — but that can also lead toward a dangerous situation if you don’t have knowledge,” he added. “It’s really buyer beware.”
Like all things on social media, not all of the “expert” advice you see is necessarily good. While there are ways to vet traditional financial advisors, it’s much harder to find out the intentions or possible conflicts of interest of someone spewing advice online.
“If you see an influencer suggesting you buy something or invest in something, you generally want to do some due diligence,” Boneparth cautioned. “It’s one thing to go blindly into a fitness product, it’s another thing to go blindly into risking your money.”
“Sometimes, the stakes are higher,” Rossman added. “We need to be especially mindful about this sort of thing.”