The Securities and Exchange Commission fined media personality Kim Kardashian for failing to fully disclose that she was paid to promote a cryptocurrency asset.
Kim Kardashian paid $1.26 million in fines after failing to disclose a payment she received for promoting cryptocurrency asset EthereumMax in June 2021.
“ARE YOU INTO CRYPT???” Kardashian wrote in a now-defunct Instagram post, according to CNBC. “THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN.”
He also included “#ad” in another post that month to promote EthereumMax, according to CNN.
In addition to being fined, she was prevented from promoting cryptocurrency assets for the next three years. She will also cooperate with an ongoing SEC investigation.
Kardashian, known for starring on reality shows featuring her family, received $250,000 to promote EthereumMax. She was ordered to pay back $260,000, which included the payment she received with interest, and a $1 million fine.
Kardashian’s net worth is estimated at $1.8 billion. Compared to her personal assets, the total fine of $1.26 million may hardly affect her financially.
SEC Chairman Gary Gensler warned other potential investors that celebrity interests are not always aligned with his own.
“This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto asset securities, it does not mean that those investment products are suitable for all investors,” Gensler said in a press release.
Michael Rhodes, an attorney representing the media personality, said he is pleased to have resolved the issue. Kardashian has yet to say anything publicly about the news, neither admitting nor denying the regulator’s findings.
“Kardashian fully cooperated with the SEC from the beginning and remains willing to do whatever it can to assist the SEC in this matter,” Rhodes said, as reported by CNBC. “She wanted to put this matter behind her to avoid a prolonged dispute. The agreement that she reached with the SEC allows her to do that so that she can get on with her many different business activities.”
This fine against a high-profile celebrity like Kardashian sends a loud and clear message from the SEC to like-minded figures that the federal agency will not tolerate celebrity crypto endorsement without including their earnings. The SEC is leading this effort to ensure that investors are not misled.
This cryptocurrency endorsement of his 250 million Instagram followers resulted in artificially inflating the value of the asset.
His promotion of EthereumMax caused investors to suffer losses. The token is estimated to be down 98% since June 13, 2021.
To protect the public interest, Congress passed a series of bills in the 1930s, beginning with the Securities Act of 1933. In an interview with CNBC, Gensler mentioned the law signed, which states that if someone promotes a value to the public, that person has to disclose that they are being paid.
While the laws predate cryptocurrencies, the SEC applies the law to cryptocurrency securities.
Kardashian was not the only public figure to be warned against this type of cryptocurrency promotion. The SEC warned celebrities looking to back cryptocurrencies for money in 2017. It made it clear to these people that they had to disclose their earnings.
Other incidents similar to the Kardashian case include record producer Khaled Mohammed Khaled, who calls himself “DJ Khaled,” and boxer Floyd Mayweather Jr.
Khaled was ordered to pay $150,000 in fines in 2018 for not disclosing the $50,000 he received for supporting cryptocurrency issuer Centra Tech Inc. Mayweather was also ordered to pay $600,000 for not disclosing the $300,000 he was paid by three issuers. .
Due to heightened recession fears, geopolitical turmoil, and rising interest rates causing wild swings in the cryptocurrency market, regulation of the digital asset market has been one of the SEC’s top priorities. The SEC will continue to punish people who interfere with it.
“We encourage investors to consider the potential risks and opportunities of an investment in light of their own financial objectives,” Gensler said in