The Securities and Exchange Commission (SEC) has fined reality TV star Kim Kardashian almost $1.3m for promoting a crypto asset via her Instagram account, without disclosing that she had been paid $250,000 to do so.
The businesswoman and influencer posted a promotion for Emax tokens (EMAX), a cryptocurrency asset security offered by EthereumMax, an online crypto company, in an Instagram story in June 2021. The post included a link to the company’s website detailing how the EMAX tokens could be purchased. At the time, the Keeping up with the Kardashians star had 225 million Instagram followers and was paid $250,000 by EthereumMax for the post.
By not disclosing this payment in the post, Kardashian violated the anti-touting provision of the federal securities laws, which mandates 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.’
Kardashian, whose net worth is $1.8bn according to Forbes, has to pay settlement charges amounting to $1.26m. This includes a disgorgement amount of $260,000 and a $1m penalty. Per the order, Kardashian also agreed not to promote any crypto asset for the next three years.
Following the charge, the SEC published a cautionary video warning investors not to make investment decisions based on celebrity recommendations.
‘Celebrity endorsements don’t mean that an investment product is right for you, or even frankly, that it’s legitimate,’ said SEC chair Gary Gensler in the video.
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.
This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.
— Gary Gensler (@GaryGensler) October 3, 2022
‘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,’ Gensler in a press release. ‘We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.’