Kim Kardashian, the reality TV star, paid $1.26 million to settle fees related to her online marketing of the EthereumMax digital token, the US Securities and Exchange Commission said Monday.
Kardashian failed to disclose a $250,000 payment to post on her Instagram account about EMAX tokens, the digital asset linked to EthereumMax (a crypto project unrelated to Ethereum, the second largest crypto token). Instagram influencers often fail to disclose paid posts, but Kardashian ran afoul of federal securities laws that explicitly require celebrities or others to disclose details of compensation they receive from such promotions.
In addition to the charges, SEC Chairman Gary Gensler posted a video with guidelines on how to avoid crypto scams, questionable promotions and report scams:
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Today @SECGov, we accused Kim Kardashian of illegally naming a crypto security. This case is a reminder that when celebrities/influencers endorse investment opps, including crypto-asset securities, it does not mean that these investment products are right for all investors.3 October 2022
Steer clear of celebrity endorsements
It’s not the first time a famous face has been used to shill for a crypto project. Everyone from Matt Damon to Steph Curry has endorsed projects. But EthereumMax seems to have received further scrutiny. In addition to the SEC lawsuit, a class action lawsuit filed in California federal court alleges Kardashian, boxer Floyd Mayweather, Jr., and former NBA player Paul Pierce for making misleading and false statements in promoting EthereumMax
Celebrity-endorsed crypto scams are a real problem. In June, investment bank Santander reported that cases of crypto fraud in the UK had increased by 61% year-on-year, and the average value of a fraud had increased by 65%, an indication that fraudsters had become more successful both in terms of the number of crimes committed, and a ability to steal more money from victims.
How to report crypto scams
In addition to taking steps to protect your digital currency, the FTC offers these resources for filing crypto-related fraud complaints:
