SEC settles with Kim Kardashian over Instagram crypto promo for $1 million
The Securities and Exchange Commission (SEC) on Monday announced a $1.26 million settlement with Kim Kardashian for promoting a cryptocurrency while not disclosing the company paid her for the promotion.
The SEC said online cryptocurrency company EthereumMax paid Kardashian, 41, $250,000 for publishing an Instagram post on June 13, 2021, touting the company’s selling of “Emax tokens,” but Kardashian did not disclose the payment in violation of the Securities Act.
“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 Chair Gary Gensler said in a statement. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
Kardashian’s 2021 post encourages users to learn about the token and instructs them to swipe up to visit the company’s website.
“This is not financial advice but sharing what my friends just told me about the ethereum max token,” Kardashian wrote in the post, in which she also wrote “#AD.”
“A few minutes ago ethereum max burned 400 trillion tokens — literally 50 percent of their admin wallet giving abc to the entire e-max community,” the post read.
The SEC, in 2017, released a statement urging caution for celebrities promoting investments to their followers, warning about the disclosure requirements under federal law.
“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,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
The SEC said Kardashian agreed to pay the $1.26 million fine, which includes a return of her profit from the post and a $1 million penalty, while not admitting or denying the regulatory agency’s findings.
“Ms. Kardashian is pleased to have resolved this matter with the SEC,” an attorney for Kardashian said in a statement.
“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,” the statement continued. “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.”
— Updated at 10:18 a.m.