Kim Kardashian will pay $1.26 million to the Securities and Exchange (SEC) after the two parties reached an agreement following charges of “unlawfully touting” a “crypto security, the agency said on Monday.
Kardashian violated the agency’s rules when she helped promote a “crypto asset security offered and sold by EthereumMax,” but not revealing that she got money to do so. In a release, SEC Chair Gary Gensler said that it doesn’t matter if you’re a celebrity or influencer, you’re still not allowed to hide that you’re getting paid to promote things – especially when it comes to investing.
“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.”
In June of last year, Kardashian posted on Instagram and said “Are you guys into crypto? This is not financial advice but sharing what my friends told me about the ethereum max token!” She also added a series of hashtags, including #disrupthistory, #emax, and the problematic #ad.
The SEC found that simply adding #ad was not enough to satisfy the laws for touting investments, Gensler told CNBC in an interview.
“If you’re advertising perfume, or you’re advertising vacation homes or anything else on the internet, there are various laws related to that. But these are the securities laws,” he said.
The SEC found that Kardashian was in violation of federal securities laws, and then Kardashian agreed to settle the issue without admitting or denying fault. She will pay the fine and also forfeit the $250,000 she received as payment, including interest.
The fine and charges may be a way for the SEC to send out a warning shot to any other celebrities or influencers who blindly promote cryptocurrency for a payday, according to CNN, who spoke to Cornell Law School professor Charles Whitehead.
“It’s a way to signal to other influencers: if you’re thinking about dealing with crypto, think twice. The SEC is also using her as an influencer – but to boost compliance with securities laws. [It’s a] smart way to bring attention to the matter so others won’t do it.”
When Kardashian posted to Instagram she had 225 million followers. She has an estimated net worth of $1.8 billion, so the fine would be the equivalent of $100 to the average American family (based on a median income of $122,000 per year).
