The Securities and Exchange Commission (SEC) has fined Kim Kardashian $1.26 million because she unlawfully tried to convince her followers to buy crypto security, EthereumMax, on Instagram without disclosing that she was paid a whopping $250,000 to publish the post.
The SEC stated that she violated the “anti-touting provision of federal securities laws” found in Section 17(b), which obligates anyone getting paid to promote security to disclose how much they are getting paid and the source and nature of those payments. This law was enacted to protect the public from investment scams.
In addition to paying the fine, she has also agreed to cooperate with the SEC’s ongoing investigation into the coin and to not promote any crypto assets for the next three years.
“Ms. Kardashian is pleased to have resolved this matter with the SEC,” her attorneys responded to the charges in a statement saying:
“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.”
The settlement, which involves a fine of $1 million, plus interest, also includes forfeiting the $250,000 payment she received.
Earlier this year, Ryan Huegerich and some other investors sued Kardashian, Mayweather, and former basketball star Paul Pierce, because they claimed they suffered losses after the celebrities promoted EMAX.
“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 while announcing the verdict.
“We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”