Kim Kardashian agreed to pay $1.26 million to settle allegations that she violated Securities and Exchange Commission rules by touting a crypto token on social media without telling her followers she was paid to do so.
The regulator said the reality TV star got $250,000 for posting about EthereumMax (EMAX) tokens on her Instagram account. The fine includes $260,000 to repay ill-gotten gains, plus prejudgment interest and a $1 million penalty. She she also agreed not to promote crypto for three years.
“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 wrote in a tweet.
- Kim Kardashian will pay $1.26 million to settle SEC claims that she promoted crypto on social media without disclosing she got paid to do so.
- SEC says she got paid $250,000 for posting about crypto on her Instagram account.
- Kardashian has agreed not to promote crypto assets for three years.
What Did Kim Kardashian Say?
Kardashian has 331 million followers on Instagram and almost 74 million on Twitter, among the largest on social media. The SEC case dates to June 2021, when she posted about EMAX tokens, using #ad and asking, “ARE YOU INTO CRYPTO??? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN.”
The now-deleted post had a link to the EthereumMax website that provided instructions for potential investors to purchase the tokens, the SEC said.
Investors Sue Celebrities
The crypto asset, which isn’t related to Ethereum, had already been promoted by superstar boxer Floyd Mayweather Jr. and former NBA star Paul Pierce. Investors filed a class-action lawsuit earlier this year in he Central District of California, accusing them of artificially inflating its value.
EthereumMax was launched in May 2021. UK authorities said her post boosted it by more than 1,370% in just two weeks.
The Bottom Line
The SEC’s announcement reignited a debate over the SEC should interfere in the crypto world, because the assets are technically classified as commodities instead of securities and spurred concern by some Twitter users that the regulator is targeting small fish instead of financial giants. It also suggests the SEC may put on its radar more celebrities who have promoted crypto.