Kim Kardashian has agreed to pay a $1.26 million fine for pushing a dubious cryptocurrency asset to her hundreds of millions of social media followers without disclosing that she’d been paid to do so, the Securities and Exchange Commission said Monday.
The reality star and business mogul agreed to settle charges brought against her by the SEC over an Instagram post promoting EMAX tokens—a celebrity-backed crypto asset offered by EthereumMax. Kardashian did not reveal that she had been paid $250,000 for the post, which contained a link to the EthereumMax website that provided instructions for buying the tokens.
“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 a news release. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.
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“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 investing in securities,” Gensler added. “Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
As well as the eye-watering fine, Kardashian agreed not to promote any crypto asset securities for three years in settling the charges.
The Keeping Up With The Kardashians star didn’t admit or deny the SEC’s allegations, which claimed that she’d violated anti-touting rules in securities laws.
“Are you guys into crypto?” Kardashian wrote in a message on her Instagram Story in June 2021; at the time she had 225 million followers on the platform. “This is not financial advice but sharing what my friends just told me about the EthereumMax token. A few minutes ago EthereumMax burned 400 trillion tokens—literally 50 percent of their admin wallet giving back to the entire E-Max community.”
Her ad came after the crypto asset had also been promoted by pro boxer Floyd Mayweather Jr. In January, Kardashian, Mayweather, and ex-NBA star Paul Pierce were sued by EthereumMax investors alleging that the brand had run a “pump and dump” scheme, in which the price of an asset is inflated with misleading marketing before being sold on to unsuspecting investors for a profit.
Speaking about the SEC’s fine, a lawyer for Kardashian told CNBC: “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 agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.”
