Kim Kardashian to pay $1.26 million to settle SEC crypto charges
Kardashian provided links to where potential investors can learn how to buy the digital currency. And while Kardashian included “#AD” at the bottom of the post, the SEC said Kardashian should have disclosed that she had received compensation in addition to the amount paid.
“This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto-asset securities, 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.”
The case is the SEC’s most significant crypto enforcement action to date against a celebrity using their platform to promote the nascent industry. It’s the latest example of Gensler’s efforts to oversee what he has called a “Wild West” market where startups and crypto boosters are hawking lightly regulated investment products. Gensler has said that most crypto tokens, including EMAX, are securities that fall under the SEC’s jurisdiction.
Kardashian attorney Patrick Gibbs, a partner at the Cooley law firm, said in a statement that Kardashian is “pleased to have resolved this matter with the SEC.” He added that the deal allows her to “move forward with her many different business activities.”
Kardashian cooperated with the SEC and “remains willing to do everything she can to assist the SEC in this matter,” Gibbs said.
The 41-year-old Kardashian was just one of many celebrities who rushed into the crypto market as trading boomed in 2020 and 2021. A crash earlier this year wiped out more than $2 trillion in value.
Digital asset exchanges and brokerages spent hundreds of millions of dollars on celebrity endorsements, stadium naming rights deals and partnerships with popular brands such as Nike and the NBA during the market’s bull run. This strategy is not unique—traditional financial institutions and technology platforms are also spending heavily on marketing—but the deluge of crypto ads prompted warnings from consumer advocates and investor protection groups.
The SEC has warned consumers about celebrities posting about investments online before, included in crypto and buyout special purpose companies, or SPACs – another investment craze of the Covid era. In 2018, hip-hop producer DJ Khaled and boxer Floyd Mayweather Jr. paid fees with the regulator to promote investment in initial coin offerings.
EthereumMax drew in several celebrity promoters. Mayweather reportedly wore a T-shirt bearing the token’s name at a bitcoin conference in 2021, when EthereumMax sponsored a boxing match between Mayweather and YouTube star Logan Paul. In May 2021, former NBA star Paul Pierce tweeted that he “earn more money with [EthereumMax] the last month” than he did with ESPN in a year.
The SEC has not alleged any wrongdoing against Mayweather or Pierce. The supervisory authority’s investigation is ongoing.
Tyler Gellasch, a former SEC official who now heads the Healthy Markets Association, said the Kardashian settlement “is clearly intended to quell the latest craze of celebrities going out — for their own profit — and promoting a digital asset.”
“It seems clear that the SEC is trying to send a message to the social media influencer community to put the brakes on these types of promotional offers,” he said.
