Kim Kardashian to Pay $1.3M SEC Fine After Failing to Disclose a Payment She Received for Promoting a Crypto Asset on Instagram

Iesha October 3, 2022 News Leave a comment

Kim Kardashian has reached a settlement agreement to pay $1.26 million after the Securities and Exchange Commission accused her of promoting crypto assets without reporting her compensation.

In addition to the settlement, without “admitting or denying the SEC’s findings,” Kim has also agreed to refrain from promoting any securities backed by crypto assets.

The SEC found that Kardashian failed to disclose that she was paid $250,000 for posting about EMAX tokens on her Instagram account.

The agency also found that her post was linked to the EthereumMax website, giving potential investors instructions on purchasing EMAX tokens.

“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 chairperson Gary Gensler. “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.”

“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,” said Kim’s lawyer.

The post in question from June 2021 read: “Are you guys into crypto???? This is not financial advice but sharing what my friends just told me about the Ethereum Max token! A few minutes ago, Ethereum Max burned 400 trillion tokens — literally 50% of their admin wallet, giving back to the entire e-max community. Swipe up to join the e-max community,” which included the hashtag “#AD,” but that did not fulfill the disclosure requirements.

According to the SEC’s ruling, Kardashian broke the anti-touting rule of the federal securities laws. In addition to the $1 million fine, Kardashian has agreed to pay $1.26 million in disgorgement, which would amount to about $260,000 (her promotional money + prejudgment interest).

Consumers have previously been warned about “potentially unlawful celebrity-backed crypto-asset offerings.”

The SEC said in 2017 that celebrity endorsements “may be unlawful if they do not disclose the nature, source and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement.” The agency encouraged investors “to be wary of investment opportunities that sound too good to be true. We encourage investors to research potential investments rather than rely on paid endorsements from artists, sports figures, or other icons.”