Kim Kardashian will pay $1.26 million and has agreed not to promote any crypto securities for three years to settle charges with the SEC that she didn’t disclose payments for touting assets that were offered and sold by EthereumMX.
Kardashian “agreed to settle the charges, pay $1.26 million in penalties, disgorgement, and interest, and cooperate with the Commission’s ongoing investigation,” the SEC said.
The SEC found that Kardashian failed to disclose that she was paid $250,000 to publish a post on her Instagram account about EMAX tokens, the crypto asset security being offered by EthereumMax. Kardashian’s post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
“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,” said SEC Chair Gary Gensler. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
“Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities,” the securities watchdog said.
Crypto is a highly volatile and risky investment that’s has been touted by actors like Matt Damon, athletes like former NBA star Paul Pierce and superstar boxer Floyd Mayweather Jr., and executives like Elon Musk, who all have huge social media followings. Kardashian’s promo, which she posted on Instagram in June of 2021, asking her millions of followers, “Are you into crypto??? This is not financial advice but sharing what my friends just told me about the Ethereum Max token.”
In this case the payment was the issue with the SEC finding that Kardashian violated the so-called ‘anti-touting’ provision of the federal securities laws.
“The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,” said Gurbir Grewal, Director of the SEC’s Division of Enforcement. “Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
Kardashian is said to be worth about $1.8 billion. Her settlement — which does not admit or deny the findings — includes $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest and a $1,000,000 penalty.