“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).
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.”