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.
Under the settlement, without “admitting or denying the SEC’s findings,” Kardashian also agreed to not promote any crypto asset securities for three years, per 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 being 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 crypto asset securities, it doesn’t mean that those investment products are right for all investors,” SEC chairperson 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 investing 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 approximately $260,000 in disgorgement (which represents her promotional payment plus prejudgment interest) and a $1 million penalty. The SEC said the investigation was continuing.
The financial regulator has previously warned consumers about “potentially unlawful celebrity-backed crypto asset offerings.”
In a 2017 notice, the SEC said that celebrity endorsements “may be unlawful if they do not disclose the nature, source and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement.” The agency encouraged 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.”