Editor’s Note: Emily Parker is executive director of global content at CoinDesk, a media, event, indices and data company, and a former policy advisor at the US State Department and writer/editor at The Wall Street Journal. She is the author of “Now I Know Who My Comrades Are: Voices From the Internet Underground.” The opinions in this commentary are her own. Read more opinion at CNN.

Emily Parker

On Monday, the Securities and Exchange Commission announced that it civilly charged Kim Kardashian for promoting a crypto asset, EthereumMax, on Instagram without disclosing that she was paid to do so. Kardashian has agreed to pay a nearly $1.3 million fine and to not promote any cryptocurrencies for three years, the SEC said.

This case reflects a much larger problem in the crypto industry: Celebrities are using their influence to promote cryptocurrencies, a notoriously complex and risky asset class, which can lead people to invest in coins or projects that they may not understand.

While the SEC went after Kardashian for not disclosing payment for promotion, it also made clear that it considers EthereumMax to be a security. Securities come with a strict set of rules, designed to protect investors. This should signal to celebrities and other crypto promoters to think twice before giving out what appears to be financial advice to a broad swath of consumers.

Kardashian isn’t the first celebrity to get in trouble with the SEC: Floyd Mayweather Jr., Steven Seagal and DJ Khaled also paid fines for their crypto promotions.

But other crypto-related celebrity endorsements, while not illegal, are still controversial. Take Elon Musk’s tweets supporting dogecoin, a Shiba Inu-themed cryptocurrency. Then there was Matt Damon’s promotion of the crypto exchange platform Crypto.com. Or Larry David’s Super Bowl ad for crypto exchange FTX suggesting you were hopelessly behind the curve if you didn’t believe in crypto. There have been so many celebrities promoting non-fungible tokens, essentially one-of-a-kind digital assets, that it’s hard to keep track.

This is not normal. It’s much rarer to see high-profile celebrities doling out financial advice about more traditional assets like stocks. “If a celebrity promoted a random stock, would you buy it?” Neeraj Agrawal, communications director at the cryptocurrency policy think tank Coin Center, told me. “Just because it’s crypto, you shouldn’t throw all due diligence out the window.”

Cryptocurrency is a fast-moving industry, and regulators have yet to catch up. New coins and projects are constantly popping up, sometimes without sufficient warnings about the risks of investing. One could argue that cryptocurrencies in general are largely sentiment-driven assets, in that their price is determined less by fundamentals and more by collective belief in their value. This can make social media a potentially powerful driver of prices. Several media reports have attributed movements in bitcoin’s and dogecoin’s price to specific Musk tweets, for instance.

This sentiment-driven mania was particularly notable last year during the bull market crypto frenzy, where much investment seemed to be driven more by fear of missing out than sober analysis. Crypto lender Celsius and stablecoin TerraUSD (UST) are just two examples of ultimately failed projects that seduced investors with the allure of high returns. Celsius filed for bankruptcy protection, and UST, which was supposed to trade at $1, saw its price drop far lower than that. Meanwhile, the once blazing-hot NFT market has suffered from a collapse in prices this year.

In such a fast-changing and confusing market, how do you distinguish winners from losers? It’s easy to imagine how a confident tweet by a celebrity could have a significant impact on a new investor.

The problem of celebrity endorsements is not going to be resolved by the SEC punishing every influencer who tweets irresponsibly about crypto. “They have to be selective in that their resources are limited,” Agrawal said. “It’s impossible to go after everyone. By going after the biggest name, it wouldn’t surprise me if this is a warning shot that is largely heard by the celebrity community.”

In that sense, Kardashian did a favor for the cryptocurrency industry. Such a high-profile example could cause other celebrities to think twice before shilling a token on social media.

“I do think people will be more careful now,” former SEC branch chief Lisa Braganca told me. “This is how the SEC speaks to the world. When they get out there and make their informational videos, it has a lot less impact. It makes a lot less noise than when they bring an enforcement action.”

A better solution to this problem would be if investors did their own research before pouring their savings into crypto, while demanding that crypto founders be more transparent about the technology and finances behind their projects. For now, though, we can just hope that this SEC action will urge celebrities to show more restraint in offering financial advice to their followers. If that happens, the crypto industry will have Kardashian to thank.