The Securities and Exchange Commission is charging reality star and entrepreneur Kim Kardashian with allegedly promoting a cryptocurrency on her Instagram account without disclosing how much she was paid to do so, the agency announced Monday.
Kardashian has agreed to pay $1.26 million in penalties to settle the charges and will cooperate with the SEC’s investigation, the agency said. Kardashian was paid $250,000 to tout EMAX tokens, sold by EthereumMax, to her tens of millions of followers in a June 2021 post. The star now has 330 million Instagram followers, making her promotions quite valuable.
“ARE YOU GUYS INTO CRYPTO????” she wrote in that post, including a link to Ethereum Max’s website, which offered instructions for how to buy the token, the SEC said. “THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN!”
Kardashian included a hashtag indicating that the post was an advertisement, but the SEC said she also needed to disclose the amount she was paid.
“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 Chair Gary Gensler said in a statement.
“We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
As part of the settlement, Kardashian has also agreed not to promote any crypto tokens for three years, the SEC said.
Patrick Gibbs, an attorney for Kardashian, said in a statement she was “pleased to have resolved this matter with the SEC.”
“Kardashian fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the SEC in this matter,” Gibbs said. “She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.”
The star – worth $1.8 billion, according to Forbes – has already faced heat for the promotion. Kardashian was named as a co-defendant in a class-action lawsuit filed in California earlier this year. The suit accused her and other celebrities touting EMAX with participating in a scheme to inflate the value of the digital token. The cryptocurrency, which has no affiliation with the second-largest crypto, Ether, has tanked 94 percent since then, according to data from CoinMarketCap. In her settlement with the agency, Kardashian neither admitted nor denied the SEC’s findings.
This is not the first time the SEC has targeted a celebrity for not disclosing a payday from hyping crypto. The agency settled charges against boxer Floyd Mayweather and music producer DJ Khaled in November 2018 for touting a number of initial coin offerings – projects that sought to raise money by issuing crypto tokens – without revealing what they were paid for the endorsements. It settled similar charges against actor Steven Seagal in 2020.
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