Kim Kardashian Pays $1.26 Million to Settle SEC Crypto Campaign Claims
Kim Kardashian agreed to pay $1.26 million to settle allegations that she violated Securities and Exchange Commission rules by touting a crypto token on social media without telling her followers she was being paid to do so.
The regulator said the reality TV star was paid $250,000 to post about EthereumMax (EMAX) tokens on her Instagram account. The fine includes $260,000 to repay ill-gotten gains, plus prejudgment interest and a $1 million penalty. She also agreed not to market crypto for three years.
“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,” SEC Chairman Gary Gensler wrote in a tweet.
Important takeaways
- Kim Kardashian will pay $1.26 million to settle SEC claims that she promoted crypto on social media without disclosing that she was paid to do so.
- The SEC says she was paid $250,000 to post about crypto on her Instagram account.
- Kardashian has agreed not to market crypto assets for three years.
What did Kim Kardashian say?
Kardashian has 331 million followers on Instagram and almost 74 million on Twitter, among the biggest on social media. The SEC case dates back to June 2021, when she posted about EMAX tokens, using #ad and asking, “ARE YOU INTO CRYPTO??? THIS IS NOT FINANCIAL ADVICE BUT TO SHARE WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN.”
The now-deleted post had a link to the EthereumMax website that provided instructions for potential investors to buy the tokens, the SEC said.
Investors sue celebrities
The crypto-asset, which is unrelated to Ethereum, had already been promoted by superstar boxer Floyd Mayweather Jr. and former NBA star Paul Pierce. Investors filed a class-action lawsuit earlier this year in the Central District of California, accusing them of artificially inflating their value.
EthereumMax launched in May 2021. British authorities said her post boosted it by more than 1,370% in just two weeks.
The bottom line
The SEC’s announcement sparked a debate about the SEC getting involved in the crypto world, because the assets are technically classified as commodities rather than securities, and fueled concerns among some Twitter users that the regulator is targeting small fish instead of financial giants. It also suggests that the SEC may put on its radar several celebrities who have promoted crypto.
