Kim Kardashian fined $1 million by SEC for crypto campaign
(AP) – The long list of celebrities promoting cryptocurrencies just got shorter. Kim Kardashian has been banned from doing so for three years — and will pay a $1 million fine — to settle federal charges that she recommended a cryptocurrency to her 330 million Instagram followers without making it clear she was paid for to do it.
The reality TV star must also forfeit $250,000 she was paid for her Instagram post about Ethereum Max tokens, plus interest, according to a Securities and Exchange Commission settlement announced Monday.
Kardashian is the latest celebrity to be caught up in regulations requiring full disclosure of people who are paid to promote financial products.
In 2020, actor Steven Seagal agreed to pay more than $300,000 as part of a similar settlement with the SEC, which also banned him from promoting investments for three years.
In 2018, the SEC settled charges against professional boxer Floyd Mayweather Jr. and music producer DJ Khaled for failing to disclose payments they received to promote investments in a digital currency.
Many celebrities and athletes regularly promote crypto through advertisements on TV and online in ways that do not violate any law. Matt Damon, Tom Brady, Reese Witherspoon and Gwyneth Paltrow are among those who have used their fame to spread enthusiasm for cryptocurrencies.
SEC Chairman Gary Gensler said in a statement that the Kardashian settlement “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 investment in securities.”
Gensler also used Monday’s sensational showdown with a celebrity as an opportunity to educate the public, releasing a humorous YouTube video warning about the potential pitfalls of investment advice doled out by the rich and famous.
“Bravo to SEC Chairman Gensler, whose action shows that no celebrity, no matter how big or famous, who profited from pushing these risky cryptocurrency investments should be able to just walk away,” said Adam Moskowitz, a class action attorney suing Mark. Cuban to promote the company Voyager Digital before it failed.
The SEC said Kardashian agreed to cooperate with an ongoing investigation, although it did not provide any details about the investigation.
An attorney for Kardashian, Patrick Gibbs, said she “cooperated fully with the SEC from the very beginning and remains willing to do everything she can to assist the SEC in this matter.”
While Kardashian is known for her role in the TV series ‘The Kardashians’, she is also a successful businesswoman with clothing and skincare brands.
The value of many cryptocurrencies rose during the pandemic amid an increase in highly speculative investments. More recently, amid a downturn in the general markets, the value of many cryptocurrencies has plummeted.
Bitcoin has lost more than half of its value in 2022, falling to around $19,000 on Monday. The Ethereum Max token that Kardashian promoted has fallen in value by more than 90% since its peak last May.
After wild swings in crypto values and dozens of scams being exposed, the crypto industry is under increasing scrutiny from the SEC and Congress. A bipartisan proposal last month would hand regulatory authority over bitcoin and ether, two popular cryptocurrencies, to the Commodity Futures Trading Commission.
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This story has been updated to correct the spelling of the actor’s last name. It’s Steven Seagal, not Segal. It also corrects the name of the CFTC. It’s the Commodity Futures Trading Commission, not the Commodities Futures Trading Commission.
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