Kim Kardashian has agreed to pay $1.26 million to settle Securities and Exchange Commission (SEC) charges that she promoted a cryptocurrency on Instagram without disclosing that she’d been paid $250,000 to do so.
The SEC said Monday that the reality TV star and entrepreneur has agreed to cooperate with its ongoing investigation.
The SEC said Kardashian failed to disclose that she was paid to publish a post on her Instagram account about EMAX tokens, a crypto asset security being offered by EthereumMax.
Kardashian’s Instagram 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.
“Ms. Kardashian is pleased to have resolved this matter with the SEC. 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,” a lawyer for Kardashian said in an email.
While Kardashian is well known for reality TV, currently appearing on “The Kardashians” on Hulu, she is also a successful businesswoman. Her brands include SKIMS, which has shapewear, loungewear, and other products, and a skincare line called SKKN.
For anyone trying to promote a product, Kardashian provides a massive megaphone with 330 million followers on Instagram.
Cryptocurrency has attracted increasing attention from Congress. A bipartisan proposal last month would hand the regulatory authority over Bitcoin and Ether, two popular cryptocurrencies, to the Commodities Futures Trading Commission after wild swings in crypto valuations, dozens of scams, and hundreds of billions of dollars gained and lost.
Kardashian is not the first celebrity to attract the attention of regulators for their involvement in cryptocurrency. In 2018 the agency settled charges against professional boxer Floyd Mayweather Jr. and music producer DJ Khaled for failing to disclose payments they received for promoting investments in digital currency.
“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.
Cryptocurrencies, after soaring during the pandemic, have had a rough year as prices swing wildly, but mostly lower, and with companies in the sector being accused by federal regulators of running illegal securities exchanges.
Bitcoin has given up more than half its value in 2022, tumbling from almost $46,000, to around $19,000 Monday.
By Michelle Chapman