Kim Kardashian Pays $1.26 Million to Settle SEC Crypto-Hype Charges
Kim Kardashian agreed to pay $1.26 million to settle charges by the Securities and Exchange Commission that she touted a crypto-asset security without disclosing the payment she received for the promotion, the agency said.
During the settlement, without “admitting or denying the SEC’s findings,” Kardashian also agreed not to market any crypto-asset securities for three years, according to the agency.
According to the SEC’s order, 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 offered by EthereumMax. Kardashian’s post linked to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
Kardashian, a celebrity reality TV star and influencer, has one of the most followed accounts on Instagram – currently with 301 million followers.
“This case is a reminder that when celebrities or influencers endorse investment opportunities, including securities in cryptoassets, that does not mean those investment products are right for all investors,” SEC Chairman Gary Gensler said in a statement. “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 investment in securities.”
The SEC’s order found that Kardashian violated the anti-touting provision of federal securities laws. Kardashian’s agreed payment of $1.26 million includes approx. $260,000 in disgorgement (representing her promotional payment plus prejudgment interest) and a $1 million penalty. The SEC said its investigation is continuing.
Finanstilsynet has previously warned consumers about “potentially illegal celebrity-backed offers of crypto-assets.”
In a 2017 announcement, the SEC said that celebrity endorsements “may be illegal if they do not disclose the nature, source, and amount of compensation paid, directly or indirectly, by the company in exchange for the endorsement.” The agency urged investors “to be wary of investment opportunities that sound too good to be true. We encourage investors to research potential investments rather than rely on paid endorsements from artists, sports figures or other icons.”
