Kim Kardashian charged $1.26 million over paid crypto advertising
Kim Kardashian has agreed to pay a fine of over a million dollars for failing to disclose a paid advertisement on social media for a cryptocurrency.
The Securities and Exchange Commission announced in a press release today that Kardashian was paid $250,000 to share a post on her Instagram account promoting EMAX tokens, sold by EthereumMax.
She did not disclose that she was paid for the endorsement, thus violating advertising and anti-touting laws.
The SEC states that — without admitting or denying the findings — Kardashian agreed to settle the charges by paying out a total of $1.26 million. The punishment is divided into a fine of 1 million dollars and approx. $260,000 in settlements representing the payment she received, plus interest.
In addition to this, she has also agreed to cooperate with the SEC’s ongoing investigation and not promote any cryptocurrency for three years.
“The federal securities laws are clear that any celebrity or other person promoting a cryptoasset security must disclose the nature, source and amount of compensation they received in exchange for the promotion,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in the press release . “Investors have a right to know whether the publicity of a security is objective, and Kardashian failed to disclose that information.”
The marketing of potentially risky crypto-assets by celebrities and influencers has been identified by the commission as a widespread problem, with SEC Chairman Gary Gensler also stating that Kardashian’s punishment should stand as a warning to her peers.
“This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto-assets, that doesn’t mean those investment products are right for all investors,” said Chairman Gensler. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
In a subsequent video shared to better explain this topic, Chairman Gensler warned investors not to base their investment strategies on celebrity and influencer endorsements.
“Even if a celebrity endorsement is genuine, each investment has its own risks and opportunities and may not suit your investment needs,” he warns. “A celebrity or influencer’s incentives are not necessarily aligned with yours.”
In a statement provided to BuzzFeed News, Kardashian’s attorney said, “Ms. Kardashian is pleased to have resolved this matter with the SEC. Kardashian cooperated fully with the SEC from the very beginning, and she remains willing to do everything she can to help 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 she can move forward with her many different business activities.”
