Kim Kardashian was charged by the Securities Exchange Commission (SEC) for a cryptocurrency promotion Instagram post. According to the SEC, the celebrity failed to disclose how much she was paid by EthereumMax (EMAX) to promote their cryptocurrency asset security.
The reality star and entrepreneur has agreed to cooperate with the SEC’s investigations and settle the charges for $1.26 million in penalties, disgorgement, and interest. The SEC says that she was paid $250,000 to promote EMAX tokens.
In her Instagram post, Kim also included a link leading interested consumers to the EthereumMax website, which offers guidelines on how to buy tokens.
According to the SEC chairperson, Gary Gensler, the case will serve as an example to other influencers and celebrities that they are required by law to disclose the nature, source, and amount they are paid to promote investment opportunities, which include cryptocurrency assets.
Kardashian was found guilty of violating the anti-touting provisions of federal laws. The $1.26 million included $1 million in penalties and $260,000 for her payment in the promotion, plus interest. In the settlement, Kardashian agreed not to endorse any crypto asset for the next three years.
Kim Kardashian’s posts in 2021 asked her followers if they were interested in cryptocurrency, followed by a disclaimer that she was not giving people financial advice but rather sharing her “friend’s” take on the EMAX tokens.
Last year, Kim Kardashian, Paul Pierce, Floyd Mayweather, and the crypto makers got sued in a class action suit for their involvement in an EthereumMax scheme. They were accused of promoting the cryptocurrency by spreading false information that drove the crypto price up, and then sold their shares at a higher price.
At the time, EthereumMax said that the intention of its promotions by celebrities was to raise awareness. However, after the class action suit, EthereumMax lost a large number of clients due to the lawsuit.
Charles Randell, the Chair of the Financial Conduct Authority in the United Kingdom, specifically mentioned Kim Kardashian in September 2021. He said the celebrity’s promotional post to her 250 million followers had one of the biggest audience reaches in history, in a speech during an economic crime symposium. He said endorsements have become popular, especially among celebrities, who are huge influencers. Reese Witherspoon and Matt Damon are an example of celebrities who have been paid to promote cryptocurrencies on various platforms. The Super Bowl even included advertisements for Americans to invest in crypto products.
Earlier this year, cryptocurrencies experienced a massive crash, prompting cryptocurrency critics to lobby for more regulations imposed on the wild and unregulated crypto market.
Senator Elizabeth Warren of Massachusetts is pushing for more rules governing crypto products, to protect vulnerable and unprotected consumers.
The Head of Policy at the Blockchain Association, Jake Chervinsky, an expert on cryptocurrency, also endorsed the moves to regulate the cryptocurrency industry.
