Kim Kardashian has agreed to pay $1.26 million to the Securities and Exchange Commission for “unlawfully touting” a crypto asset security on her Instagram account.
This was comfirmed by the SEC on Monday 03 October 2022 morning.
The reality star has settled with the SEC following charges that she failed to disclose payment for promoting EthereumMax’s crypto asset to her hundreds of millions of social media followers, according to a press release from the SEC.
As part of the settlement, Kardashian has also agreed to cooperate with an ongoing SEC investigation and said she will not promote any crypto asset securities for three years.
Despite the settlement, the SEC said the Skims founder neither admitted nor denied the SEC’s findings, and in a statement, a lawyer for Kardashian said that she was pleased to have resolved this matter.
Gary Gensler, the chairman of the SEC, said a statement: “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.” He added in an appearance on CNBC’s Squawk Box, “Congress passed a law many decades ago called the Securities Act, and it was to protect the public. Part of that law said that if you tout a stock you have to disclose if you’re getting paid.”
In a statement to media outlets, Kim Kardashian’s lawyer said, “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. 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.”
The Selfish author originally posted the ad for EthereumMax to her Instagram Stories in June of last year. The post began, “Are you guys into crypto???? This is not financial advice but sharing what my friends just told me about the Ethereum Max token!” Her post also included a link to the EthereumMax website that provided instructions on how to purchase the token. While Kardashian did label the post as an “#ad,” the SEC said she failed to report that she was paid $250,000 to post about the EMAX tokens. By not disclosing that payment, the SEC said she was in violation of federal securities laws. Kardashian agreed to pay about $260,000 for the payment she received for the ad, plus interest, in addition to a $1 million penalty.
The reality star is also currently dealing with a legal complaint from investors in the crypto asset.
A class action lawsuit filed earlier this year accused celebrity promotors including Kardashian, Floyd Mayweather Jr., and former NBA star Paul Pierce of partaking in a “pump and dump” scheme, or artificially inflating the value of the EthereumMax asset through these types of promotions. (Kardashian’s legal team later filed a motion to dismiss the lawsuit, per court documents seen by Cointelegraph; Mayweather is also reportedly seeking to toss out the claims against him.)