Kim Kardashian to Pay $1.26 Million to Settle SEC Charges
According to the Securities and Exchange Commission, Kim Kardashian agreed to pay $1.26 million to resolve allegations that she promoted a cryptocurrency asset security without reporting the compensation she got for the promotion. As part of the settlement, the SEC says Kardashian also agreed not to promote any securities backed by crypto assets for the next three years.
According to the SEC’s decision, Kardashian failed to disclose that she was paid $250,000 to write a post on her Instagram account touting EMAX tokens, the digital asset security being provided by EthereumMax. Kardashian’s tweet included a link to the EthereumMax website, which gave instructions on how to buy EMAX coins for potential investors. Kardashian, a reality-TV personality and influencer, has one of the most popular Instagram profiles, with 301 million followers as of right now.
“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 chairperson Gary Gensler said in a statement. “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.”
According to the SEC’s ruling, Kardashian broke the anti-touting rule of the federal securities laws. In addition to the $1 million fine, Kardashian has agreed to pay $1.26 million in disgorgement, which would amount to about $260,000 (her promotional money + prejudgment interest). The investigation, according to the SEC, is ongoing. Consumers have already been warned by the financial authorities about “possibly illegal celebrity-backed crypto asset sales.”
The SEC said in a 2017 notice that celebrity endorsements “may be unlawful if they do not disclose the nature, source, and amount of any remuneration paid, directly or indirectly, by the company in exchange for the endorsement.” The agency advised investors to “be aware of investment proposals that sound too good to be true.” Before making a decision, we tell investors to do their own research instead of relying only on paid endorsements from celebrities, athletes, and other big names.