Kim Kardashian will pay a $1.26 million settlement to the US Securities and Exchange Commission for promoting crypto on her Instagram page without disclosing that she was paid. The deal — announced Monday morning by the SEC — marks among the most high-profile examples of how federal regulators are working to shut down celebrity endorsements of cryptocurrency.
“This case is a reminder that when celebrities or influencers endorse investment opportunities, including securities in cryptoassets, that does not mean those investment products are right for all investors,” SEC Chairman 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.”
Kardashian promoted the crypto asset, EthereumMax, on her Instagram to her more than 330 million followers in June 2021 for $250,000. She included the hashtag #ad with her post, but SEC officials said that’s not enough to comply with laws surrounding financial investments and securities.
» READ MORE: Kim Kardashian settles with SEC over crypto campaign
Kevin Werbach, professor at the University of Pennsylvania’s Wharton School who designed it Economics of Blockchain and Digital Assets program, said the SEC targeting Kardashian sends a message to the public.
“Kardashian is a high-profile figure,” he said. “People will pay attention to an SEC action against a celebrity who essentially admitted that she broke the law. It makes a statement.”
Werbach said The charges and the settlement imply that the SEC is concerned about security risks.
“We have investor and consumer protection laws because, time and time again, these groups are taken advantage of by promoters and scammers,” he said. “Digital assets are exciting innovations, but when they are marketed as investments, they should have the same protections that other investors get.”
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He said he believes the SEC will continue to go after influencers who improperly promoted digital assets. Earlier this year, Kardashian and other celebrities including Floyd Mayweather were named as defendants in a class action lawsuit accusing them of artificially inflating the price of EthereumMax. Reese Witherspoon, Gwyneth Paltrow, the D’Amelio sisters and other high-profile stars have previously been criticized for promoting cryptocurrency without also discussing the risks.
Kardashian’s attorney said in a statement to news outlets that the celebrity is happy to “move on” and “put this case behind her.” Drexel University finance professor Daniel Folkinshteyn said Kardashian could have easily avoided those charges.
“Practically, all one needs to do to avoid breaking the laws here is to disclose the compensation received in exchange for the advertising activity, so as not to mislead potential investors into thinking you are giving your own unbiased opinion,” he said.
As part of her settlement, Kardashian cannot market cryptocurrencies for three years, lost the payment she received from EthereumMax, and agreed to pay a $1 million fine. But what does that mean for someone worth an estimated net worth of $1.8 billion? Apparently not much.
We crunched the numbers and found out what kind of sales Kardashian would have to make to pay off that $1.26 million:
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2,000 SKKN of Kim Complete Skin Care Collection Bundles, retailing for $575 each
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5,000 pairs of her sister Khloé’s Good American jeans sell for $245 each
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6,300 bottles of her half-sister Kendall Jenner’s 818 Tequila Reserve limited edition, priced at $200 each
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703 Balenciaga trash bags — like the one she got as a gift — valued at $1,790 each
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3,150 Yeezy Gap coats valued at $400 each
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1,625 pairs of Christian Louboutin heels, costing $775 each
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About one and a quarter advertising posts for a fast fashion company on Instagram, valued at $1 million each, but reportedly declined
