- Australian-based lawyers have warned that it might be safer for celebrities to “stick with their day job” or risk lawsuits and significant fines for issuing memecoins.
- Celebrities, including Caitlyn Jenner, Iggy Azalea, and Jason Derulo, who have launched and promoted memecoins on Solana since late May, could be violating securities laws.
Celebrities selling memecoins may be “painting a target” on their backs according to two Australian-based lawyers whose clients include cryptocurrency firms.
David Chung, founding director of Creo Legal based in Brisbane, said “Nothing gets the SEC to act faster than shilling a memecoin,” in a recent Cointelegraph interview.
Related: Celebrity Memecoins: The Rising 2024 Crypto Trend and Its Significant Risks
He said Caitlyn Jenner, who was one of the first to launch an eponymous token in the latest celebrity memecoin craze, had put herself in the firing line of US regulator the Securities and Exchange Commission:
The SEC could potentially go after her for selling unregistered securities without an appropriate license.
David Chung, Australian lawyer Celebrities Are Courting SEC Enforcement And Class Actions
Celebrities including Jenner, Jason Derulo, Andrew Tate, Iggy Azalea, rappers Lil Pump and Trippie Red, Floyd Mayweather—and just this week, Lionel Messi—have been associated with spruiking memecoins in 2024. Many were launched on the Solana-based pump.fun platform.
Related: KO in First Round: UFC Star Khamzat Chimaev Faces Insider Trading Allegations over Memecoin Launch
Brisbane-based partner at global law firm Clyde & Co, Liam Hennessy, told Cointelegraph that celebrities, such as Kim Kardashian, had a bad run in the last bull cycle for unlawfully touting crypto.
Kardashian paid a US$1.26 million settlement to the SEC in 2022 for her role in promoting the pump and dump scheme, Ethereum Max, to her 326 million Instagram followers. Kardashian and a number of other celebs, including Tom Brady and Larry David, also had class action lawsuits filed against them in 2022-23 from investors seeking damages in the wake of losses.
Hennessy said the issuers of celebrity tokens may need to be registered with the SEC in light of the regulator’s view that “nearly all crypto tokens are securities”. He said unlicensed activity can attract substantial penalties and fines.
Chung said more class actions could arise this time around “if enough people lose their money”. “The vast majority of memecoin projects end up going to zero, so I’m not expecting anything different here,” he said.
Insider Activity Leaves Fans Out of Pocket
While memecoins have no intrinsic value, by manipulating markets and driving up interest among fans, their issuers can make significant profits—the problem is, once they dump, fans are left holding a worthless coin.
After reaching all-time highs in June/July this year, $MOTHER is down by over 85%, $JENNER is down over 50%, $DADDY is down 47%, and $JASON is down over 50%.
Blockchain data platform Bubblemaps has demonstrated that many of the celeb-backed projects appear to have a large amount of insider trading activity, including Tate’s $DADDY token and Azalea’s $MOTHER.
Azalea reacted to attempts to reach her for comment and subsequent press coverage by Cointelegraph via a post on X, stating her coin was “advised by top tier legal advice,” and that “We have never put a toe into murky water, and we are not a security.”
Source:
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