The Securities and Exchange Commission (SEC) has fined Kim Kardashian over $1 million for “unlawfully touting” a cryptocurrency asset on her Instagram account.
Last year, Kardashian promoted the crypto asset EthereumMax to her millions of followers in an Instagram Stories post. However, she failed to publicly disclose that she was paid $250,000 to tout the speculative cryptocurrency, according to the SEC.
“The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, in Monday’s announcement.
"Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information,” he added. Since Kardashian promoted Ethereum Max, the value of the token has also taken a major dive.
Kardashian has agreed to settle the charges by paying $1.26 million, without admitting or denying the allegations. The penalty includes forfeiting the $250,000 that she was paid to promote EthereumMax, $100,000 in interest, and a $1 million penalty for violating the anti-touting provision law.
Kardashian has also agreed to refrain from promoting any crypto assets for a three-year period.
So far, Kardashian hasn’t responded to settling the SEC charges. But her legal troubles may not be over. She is also facing a lawsuit from investors for allegedly “pumping and dumping” EthereumMax. In the meantime, the SEC has launched a new video, urging the public to be careful when celebrities endorse a cryptocurrency.
“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors," SEC Chair Gary Gensler said in Monday’s announcement.