Reality TV star Kim Kardashian has paid $1.26 million fine after she illegally promoted an illegal crypto investment scheme on Instagram and received money for each post.
The US Securities and Exchange Commission (SEC) said Kim Kardashian has also agreed to not promote any crypto asset securities for three years.
She promoted on social media a crypto asset offered and sold by EthereumMax without disclosing the payment she received for the promotion.
The SEC said that she agreed to settle the charges, pay $1.26 million in penalties, disgorgement, and interest, and cooperate with the Commission’s ongoing investigation.
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 series of posts to her Instagram story, Kim Kardashian asked her followers, “Are you guys into crypto??? This is not financial advice but sharing what my friends just told me about the ethereum max token!”
Her followers were then encouraged to head to the EthereumMax website and join the E-Max community. Kim Kardashian has 331 million followers on Instagram at present.
The SEC found that Kim 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. Kim Kardashian’s post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
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 Kim Kardashian failed to disclose this information, Gurbir Grewal said.