The Securities and Exchange Commission (SEC) has charged Kim Kardashian $1.26m in penalties over advertising a crypto asset on her Instagram.
Kardashian failed to disclose the payment she received for advertising the EthereumMax crypto, which the SEC believes was $250,000. The post on the Instagram account contained a link to the EthereumMax website that instructed people on how they can purchase EMAX tokens.
The SEC’s ruling found that Kardashian was in violation of the anti-touting provision of the federal securities law. Despite neither admitting nor denying the SEC’s findings, Kardashian agreed to pay the fine; $260,000 for disgorgement and $1m in penalties.
Kardashian has also agreed to not promote any other crypto asset securities for the next three years, according to the SEC.
“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.”
Gensler also published a video warning investors not to make investment decisions based solely on the recommendations of a celebrity or influencer.
Gurbir S Grewal, Director of the SEC’s Division of Enforcement, added: “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.”
“Investors are entitled to know whether the publicity of a security is unbiased, and Ms Kardashian failed to disclose this information.”