Kim Kardashian has been charged by the Securities and Exchange Commission for promoting a crypto asset security issued and sold by EthereumMax on social media without reporting the compensation she received for the promotion.
Kardashian agreed to settle the case by paying $1.26 million in fines, disgorgement, and interest, and cooperating with the Commission's continuing investigation.
According to the SEC, Kardashian failed to disclose that she received $250,000 from EthereumMax to write a post regarding EMAX tokens on her Instagram account.
Kardashian's tweet included a link to the EthereumMax website, where prospective investors could find instructions on how to buy EMAX coins.
"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.
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"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 S. 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."
According to the SEC, Kardashian broke the federal securities laws' anti-touting clause.
Kardashian agreed to pay the $1.26 million, which included about $260,000 in disgorgement (which reflects her promotional money), plus prejudgment interest, along with a $1,000,000 penalty, without admitting or contesting the SEC's allegations.
Kardashian also consented to refrain for three years from endorsing any cryptocurrency-related securities.
In June last year, the celebrity posted an ad for EthereumMax on her Instagram story to her 228 million followers.
Followed by a short clip of her speaking to her camera about EthereumMax with ”#ad” written at the bottom of the screen, Kardashian posted the message: “Are you guys into crypto???”
Photo: Courtesy of Eva Rinaldi on flickr
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