Kim Kardashian agrees to pay $1.25 million fine over crypto promotion
SEC Chairman Gary Gensler said this case should serve as a reminder for investors to evaluate opportunities endorsed by celebrities or influencers
Reality TV star Kim Kardashian’s involvement in crypto got her in trouble with federal regulators.
The social media influencer has agreed to pay a fine of $1.26 million after promoting a crypto asset in an Instagram post and failing to disclose her compensation of $250,000 in exchange for the promotion, per CNN.
The assets being promoted were EMAX tokens, offered by EthereumMax. Kardashian’s post linked EthereumMax’s website, where potential investors found instructions on how to purchase the tokens, the Securities and Exchange Commission said in a press release.
How did Kim Kardashian break the law with crypto promotion?
SEC Chairman Gary Gensler said this case should serve as a reminder for investors to evaluate opportunities endorsed by celebrities or influencers.
“We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals,” he said, per the release.
He added that her case should also remind celebrities to disclose their compensations when promoting investment opportunities, as required by law.
This means revealing “the nature, source, and amount of compensation they received in exchange for the promotion,” Gurbir S. Grewal, the director of the SEC’s Division of Enforcement, explained.
“Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
Kardashian’s lawyers told CNN that she “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,” the attorneys added. “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.”
Investors unravel crypto promotion
In an Instagram post from June 2021, the reality star — who has 250 million followers — wrote: “ARE YOU INTO CRYPTO??? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN,” according to CNBC.
The post included hashtags like #ad, #emax and #disrupthistory.
Kardashian, former NBA star Paul Pierce and boxing star Floyd Mayweather Jr. were sued by investors earlier this year for “artificially inflating the value of the asset,” the report added.
According to Vox, the SEC has been more willing to regulate cryptocurrency investment schemes that fall under their jurisdiction.
This was evident when the agency sued Coinbase for trying to launch a program called Lend, which would allow an investor to borrow USDC, a form of crypto whose value is tied to the U.S. dollar, another Vox report explained.
What is Kim Kardashian’s net worth?
According to Forbes, Kardashian has a net worth of almost $1.8 billion, making the SEC fine look like a drop in the ocean.
This news comes on the heels of the launch of her latest business venture — concrete home decor, like tissue boxes (available for $89) and wastebaskets ($129).
The reality star launched a private equity firm earlier in September. Apart from that, she owns Skims, a shapewear and lounge brand.
She also sold beauty products under KKW Beauty and perfumes under KW Fragrance, but Kardashian took a break from the brand and told fans to expect reinvented products sometime in the future, according to Seventeen.