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SEC Charges Kim Kardashian for Unlawfully Touting Crypto
Kardashian has agreed to pay $1.26 million to settle
According to a press release, the Securities and Exchange Commission charged Kim Kardashian for promoting cryptocurrency without revealing how much she was paid for it.
In a settlement, Kardashian has agreed to pay $1.26 million dollars and will cooperate with the SEC investigation.
Kardashian was paid $250,000 by EthereumMax to promote tokens. Kardashian has 330 million followers on instagram.
While she did label it as an ad in a hashtag, that was not enough according to the SEC.
Her post from June 2021 stated
“ARE YOU GUYS INTO CRYPTO???? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN!”
The SEC also said that the post had a link to EthereumMax EMAX tokens.
Gary Gensler, SEC Chair, stated,
“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. We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
Patrick Gibbs, Kardashian’s lawyer, released this statement on her behalf.
“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.”
In addition to the fine, Kardashian cannot advertise any crypto tokens for three years.
The full text of the press release from SEC is below:
The Securities and Exchange Commission today announced charges against Kim Kardashian for touting on social media a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion. Kardashian agreed to settle the charges, pay $1.26 million in penalties, disgorgement, and interest, and cooperate with the Commission’s ongoing investigation.
The SEC’s order finds that 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 contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
"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," Chair Gensler 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," said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. "Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information."
The SEC’s order finds that Kardashian violated the anti-touting provision of the federal securities laws. Without admitting or denying the SEC’s findings, Kardashian agreed to pay the aforementioned $1.26 million, including approximately $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest, and a $1,000,000 penalty. Kardashian also agreed to not promote any crypto asset securities for three years.
The SEC’s investigation, which is continuing, is being conducted by Jon A. Daniels, Alison R. Levine, and Pamela Sawhney of the Enforcement Division’s Crypto Assets and Cyber Unit, and Kerri Palen, Lisa Knoop and Victor Suthammanont of the New York Regional Office. The case was supervised by Mark R. Sylvester of the Crypto Assets and Cyber Unit and Carolyn Welshhans.
The SEC’s statement urging caution regarding potentially unlawful celebrity-backed crypto asset offerings can be found here. SEC Chair Gensler today published a videowarning investors not to make investment decisions based solely on the recommendations of a celebrity or influencer.