The Securities and Exchange Commission (SEC) announced Monday charges against Kim Kardashian for using social media to personally tout a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the plug.
Kardashian has agreed to settle the charges.
Payment by the reality TV star is expected to be in the vicinity of $1.26 million in penalties, disgorgement, and interest.
Cooperation with the SEC’s ongoing investigation has also been given as an undertaking of the settlement.
The SEC said Kardashian failed to disclose that she was paid $250,000 to publish a post on her Instagram account about EMAX tokens, a crypto asset security being offered by EthereumMax.
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,” Gurbir Grewal, director of the SEC’s division of enforcement, said in a prepared statement.
Kardashian has agreed to not promote any crypto asset securities for three years.
The SEC made clear the reasons for its actions along with a general warning.
“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,” Gensler added.
The SEC’s statement urging caution regarding potentially unlawful celebrity-backed crypto asset offerings can be found here.
Gensler has published a video warning investors not to make investment decisions based solely on the recommendations of a celebrity of influencer.