Kim Kardashian Settles SEC Lawsuit Over Crypto Campaign
Kim Kardashian has agreed to pay $1.26 million to settle Securities and Exchange Commission charges that she promoted a cryptocurrency on Instagram without disclosing that she had been paid $250,000 to do so.
The SEC said Monday that the reality TV star and entrepreneur has agreed to cooperate with the ongoing investigation.
The SEC said Kardashian failed to disclose that she was paid to publish a post on her Instagram account about EMAX tokens, a crypto-asset security offered by EthereumMax.
Kardashian’s Instagram post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
“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 Grewal, director of the SEC’s Division of Enforcement, said in a prepared statement.
Kardashian has agreed not to market any crypto-asset securities for three years.
“Ms. Kardashian is pleased to have settled 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. She wanted to get this matter behind her to avoid a protracted dispute. The settlement she reached with the SEC allows her to do so so she can move forward with her many different business activities,” a lawyer for Kardashian said in an email.
While Kardashian is known for reality TV, currently appearing on “The Kardashians” on Hulu, she is also a successful businesswoman. Her brands include SKIMS, which makes shapewear, loungewear and other products, and a skincare line called SKKN.
For anyone trying to promote a product, Kardashian provides a huge megaphone with 330 million followers on Instagram.
The crypto industry often uses influencers and celebrities to promote new tokens or products. Matt Damon appears in ads for Crypto.com, and other celebrities who have been paid to do crypto campaigns include Reese Witherspoon and Gwyneth Paltrow.
Nor is Kardashian the first celebrity to attract the attention of financial regulators. 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 digital currency investments.
“This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto-asset securities, that doesn’t mean those investment products are right for all investors,” SEC Chairman Gary Gensler said. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
“Ms. Kardashian’s 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 investment in securities,” Gensler added.
Cryptocurrency has also attracted increasing attention from Congress. A bipartisan proposal that emerged last month would hand over regulatory authority over Bitcoin and Ether, two popular cryptocurrencies, to the Commodities Futures Trading Commission after wild swings in crypto values, dozens of scams and hundreds of billions of dollars gained and lost.
Cryptocurrencies, after soaring during the pandemic, have had a tough year as prices fluctuate wildly, but mostly lower, and with crypto companies under intensified scrutiny.
The token Kardashian promoted has performed particularly poorly and is now down less than 10% of its peak price.
Bitcoin has given up more than half its value in 2022, falling from nearly $46,000 to around $19,000 on Monday.
