Kim Kardashian has been charged by the Securities and Exchange Commission for promoting a crypto asset security offered and sold by EthereumMax on social media without reporting the compensation she got for the promotion. In exchange for dropping the accusations, paying $1.26 million in fines, disgorgement, and interest, and cooperating with the Commission’s ongoing investigation, Kardashian agreed to settle the case.
According to the SEC’s decision, Kardashian failed to disclose that she received $250,000 from EthereumMax to write a post regarding EMAX tokens on her Instagram account.Kardashian’s post included a link to the EthereumMax website, where prospective investors could find instructions on how to buy 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.”
According to the SEC’s ruling, Kardashian broke the federal securities laws’ anti-touting clause.Kardashian agreed to pay the aforementioned $1.26 million, which included about $260,000 in disgorgement (which represents her promotional money), plus prejudgment interest, along with a $1,000,000 penalty, without admitting or contesting the SEC’s findings.Kardashian also consented to refrain for three years from endorsing any cryptocurrency-related securities.
The Enforcement Division’s Crypto Assets and Cyber Unit’s Jon A. Daniels, Alison R. Levine, and Pamela Sawhney, as well as the New York Regional Office’s Kerri Palen, Lisa Knoop, and Victor Suthammanont, are conducting the SEC’s ongoing investigation. Mark R, Sylvester of the Crypto Assets and Cyber Unit and Carolyn Welshhans oversaw the case.
Today, SEC Chair Gensler released a video cautioning investors not to base their financial choices exclusively on the advice of a celebrity or other influential person.
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