SEC Fines Kim Kardashian $1.26 Million for Illegally Promoting Crypto-Security
The US Securities and Exchange Commission has accused Kim Kardashian of touting on social media a crypto-asset security offered and sold by EthereumMax without disclosing what she was paid for the promotion.
Ms Kardashian agreed to settle and pay $1.26 million in “penalties, disgorgement and interest” and cooperate with the SEC’s continuing investigation, the regulator said.
She failed to disclose that she was paid $250,000 to publish a post on her Instagram account about Emax tokens, the crypto-asset security offered by EthereumMax, the commission said.
One of her posts contained a link to the EthereumMax website, which provided instructions to potential investors on how to purchase Emax tokens.
“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,” said SEC Chairman Gary Gensler.
“We encourage investors to consider the potential risks and opportunities of an investment 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.”
Last month, the billionaire reality TV star and businesswoman founded a private equity firm that will focus on sectors including consumer products, digital and e-commerce, consumer media, hospitality and luxury.
Kardashian, who has an estimated net worth of $1.4 billion, co-founded SKKY Partners with Jay Sammons, the former New York-based global head of consumer, media and retail at Carlyle Group, one of the world’s largest private equity firms.
Gurbir Grewal, director of the SEC’s Division of Enforcement, said federal securities laws were clear that “any celebrity or other person promoting a crypto-asset security must disclose the nature, source and amount of compensation they received in exchange for the promotion”.
“Investors have a right to know whether the publicity of a security is objective, and Kardashian failed to disclose that information,” Grewal said.
Ms Kardashian violated the anti-touting provision of the Federal Securities Act, according to the SEC.
Without admitting or denying the SEC’s findings, Kardashian agreed to pay the $1.26 million fine.
The penalty includes about $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest and a $1 million fine.
Ms Kardashian also agreed not to market any crypto-asset securities for three years.
Updated: 3 October 2022, 11:59
