Kim Kardashian will pay $1.26-million fine to SEC for promoting cryptocurrency
Kim Kardashian will pay $1.26 million in penalties to the Securities and Exchange Commission after plugging a cryptocurrency on social media without disclosing what she was compensated for promoting it. She has also vowed not to advertise any forms of cryptocurrency for the next three years.
The SEC confirmed Monday in a news release that the mega-influencer has agreed to settle the charges and cooperate with its ongoing investigation after she did not disclose to her millions of social media followers that she received $250,000 for an Instagram post advertising EthereumMax tokens. In the caption of the post, the reality TV star shared a link to the EMax website, which offers instructions on how to invest in the 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,” SEC Chair Gary Gensler said in a statement.
“We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
Gensler added that the Kardashian 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.”
In the statement provided Monday to the Los Angeles Times, an attorney for Kardashian said 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 statement continued.
“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 SEC investigation found that Kardashian’s Instagram post violated the anti-touting provision of federal securities laws. Although she did not affirm or deny the SEC’s conclusion, Kardashian has willingly committed to paying the $1.26-million fine — which covers the money she was paid for the promotion, as well as prejudgment interest and a $1-million penalty.
In addition to publicly punishing Kardashian, the SEC published a video Monday discouraging investors from taking financial advice from celebrities and influencers at face value.
After becoming a household name thanks to the hit E! series “Keeping Up With the Kardashians,” the 41-year-old celebrity is known for capitalizing on her immense fame via brand deals and personal enterprises. Her lucrative beauty empire includes a shapewear line called Skims and a skincare collection called SKKN By Kim. She currently stars alongside her prominent family members in the popular Hulu show “The Kardashians.”
Crypto has also been in the spotlight recently as investors have seen prices plunge and companies crater, with fortunes and jobs disappearing overnight. Some firms have been accused by federal regulators of running an illegal securities exchange.
The currency is currently at the center of a bipartisan bill introduced by Sens. Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.) that would transfer regulatory authority over bitcoin and ether to the Commodities Futures Trading Commission. Past bills have proposed transferring that power to the SEC.
“The federal securities laws are clear,” Gurbir S. Grewal, director of the SEC’s division of enforcement, said in a statement reiterating 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.”
The Associated Press was used in compiling this report.