Kim Kardashian
Photo: David Livingston/Getty Images

Gary Gensler is keeping up with Kim Kardashian

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Tuesday: celebs in the SEC’s spotlight, a swipe at swipe fees, and CFTC vs. Digitex.

Off the chain

Sens. Dick Durbin and Roger Marshall have introduced a proposal intended to cut credit card fees through amendments to the annual National Defense Authorization Act. But there’s an ironic side note to the way Durbin presented the language. The senator said in a statement that the measure would “bring transparency to the shameful surcharge fees inflicted upon our veterans.” We can help with that! The surcharge in question, paid at government-run military commissaries, is mandated by Congress. Durbin voted to authorize the imposition of fees on veterans in an earlier defense appropriation act.

— Owen Thomas (email | twitter) and Ryan Deffenbaugh (email | twitter)

A Kardashian-sized audience

Gary Gensler took on a Kardashian to amplify the SEC’s warning about celebrity crypto. Kim Kardashian agreed to pay a $1.26 million penalty for failing to report that she got paid to endorse EMAX tokens. It’s a high-profile affirmation of the SEC’s controversial position that most cryptocurrencies are, in fact, securities, and just like stock promoters, celebrities better follow the rules if they want to pitch a token to the public.

Disclosure rules. “Ms. Kardashian’s case” is a reminder that celebrities must “disclose to the public when and how much they are paid to promote investing in securities" like crypto tokens, Gensler said.

  • The SEC had actually put out this warning even before Gensler’s time in the wake of the ICO craze a few years ago. In 2017, the regulator cautioned investors “to be wary of investment opportunities that sound too good to be true” and of “paid endorsements from artists, sports figures, or other icons.”
  • The following year the SEC announced that boxer Floyd Mayweather and music producer DJ Khaled agreed to pay “disgorgement, penalties and interest” for failing to report that they got paid for touting initial coin offerings.

The cases underline the perils of celebrity endorsements in the world of investment finance, where “you can't be paid to promote a stock without disclosing that you're being paid,” Marc Fagel, a former SEC San Francisco regional director, told Protocol.

  • Online influencers make a living on hype. But in the world of securities, “overexuberance without proper disclosures and disclaimers is going to be considered misleading and is going to get people in hot water,” Andrew Lom, global head of private wealth at Norton Rose Fulbright, told Protocol.
  • Mike Fasanello, chief compliance officer at LVL, said “a seasoned businesswoman like Ms. Kardashian really should have known better considering her career is built largely on advertising and her public image.”

It’s a significant PR moment for the SEC. While the regulator has gone after other offending crypto celebrities, the Kardashian case is a “bigger win,” Fagel argued.

  • She’s a huge celebrity, after all, whose popularity extends beyond the crypto and finance realms. “There are a lot more people reading about Kim Kardashian” than scouring other cases and news stories involving crypto, he told Protocol. The federal government “has an interest in bringing high-profile cases as a deterrent matter because it gets a lot more attention.”
  • In fact, the Kardashian case “may turn into the best public service announcement not to take investment advice from a celebrity,” Bill Callahan, director of government strategic affairs at Blockchain Intelligence Group. It could also serve as a “warning to others that they must settle their investigations by the SEC” and other law enforcement agencies.
  • The fine Kardashian has to pay is “a nominal penalty considering her overall net worth,” Fasanello said. But the SEC action “is meant to educate the masses rather than to penalize the individual.”

“Simply being a crypto enthusiast publicly isn't going to get anyone in trouble,” even among celebrities, Melody Brue of Moor Insights & Strategy told Protocol. In other words, Matt Damon is probably off the hook for saying that “fortune favors the brave” in a ad. But trying to make money from touting crypto products is a serious matter, Brue added: “However vague you believe crypto as a security rule to be, it's clear Gensler is going to apply the same regulations, disclosure requirements, and marketing rules that are applied to securities.”

— Benjamin Pimentel (email | twitter)


Alibaba — a leading global ecommerce company — is a particularly powerful engine in helping American businesses of every size sell goods to more than 1 billion consumers on its digital marketplaces in China. In 2020, U.S. companies completed more than $54 billion of sales to consumers in China through Alibaba’s online platforms.

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On the money

The CFTC filed a complaint against Digitex and its founder. The agency said Adam Todd and four companies he controlled — Digitex LLC, Digitex Limited, Digitex Software Limited, and Blockster Holdings Limited Corporation — offered futures outside a registered exchange and manipulated DGTX, the crypto exchange’s “native token.”

Sen. Elizabeth Warren says fraud is increasing on Zelle, and banks are failing to pay most customers back. The four big banks that reported data to the progressive senator said scam and fraud claims were on pace to exceed $255 million this year, compared to $90 million in 2020.

DeFi is catching up to CeFi, according to TradFi. A report from Citigroup found that decentralized cryptocurrency exchanges have grown faster than centralized exchanges over the past two years.

Lemonade has expanded to the U.K. The insurtech firm is partnering with Aviva, one of the country’s largest general insurers.


Crypto? That don’t impress Janet Yellen much. “As we have painfully learned from history, innovation without adequate regulation can result in significant disruptions and harm to the financial system and to individuals,” the Treasury secretary said as the Financial Stability Oversight Councilreleased a report warning of the systemic risks a fast-growing digital asset sector could pose.

Deal flow

Uniswap is raising an equity round of between $100 million and $200 million at a $1 billion valuation. According to a report from TechCrunch, the DeFi protocol is in talks with Polychain and one of Singapore’s sovereign wealth funds.

San Francisco-based online debt manager Tally raised an $80 million series D round. The round was led by Sway Ventures with participation from Israeli insurer Menora Mivtachim, bringing the company’s total raised to $172 million.

Bridge Money raised $5.8 million in a seed funding round led by TMV. Founder Collective, Kapor Capital, Acumen America, Plug and Play Ventures, Basecamp Fund, and others participated in the round.

Italian payment company Satispay raised a 320 million euro series D round, reaching a valuation over 1 billion euros. Addition led the round, with participation from Block, Tencent, and Greyhound.

Crypto data company Messari raised $35 million in a series B round led by Brevan Howard Digital. The company describes itself as a “Bloomberg for crypto.”

Bot-driven automated crypto trading platform 3Commas raised $37 million in a series B round. Alameda Research, Jump Crypto, and Target Global led the round.


Using economic multipliers published by the U.S. Bureau of Economic Analysis, NDP estimates that the ripple effect of this Alibaba-fueled consumption in 2020 supported more than 256,000 U.S. jobs and $21 billion in wages. These American sales to Chinese consumers also added $39 billion to U.S. GDP.

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Thanks for reading — see you tomorrow!

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