Kim Kardashian has agreed to pay $1.26 million to settle fees with the US securities regulator for promoting cryptocurrencies without disclosing that she was paid to do so.
The U.S. Securities and Exchange Commission said on Monday that the reality TV star failed to disclose the $250,000 payment she received for posting about a crypto security token sold by EthereumMax. Her Instagram account has 331 million followers.
Last year, Kardashian asked her 225 million followers: “Are you guys into crypto?????” in one Instagram post drew attention to EthereumMax, a new coin at the time.
The post has resonated throughout the financial markets for its extraordinary reach and is emblematic of a booming trend involving celebrity endorsements of crypto assets.
But the EthereumMax tokens dropped 70% of their value a week after posting, making a difference collective action accused Kardashian and other celebrities of helping to inflate the coin’s value in a scheme that benefited its supporters and hurt investors. The case is being conducted through a US federal court. Kardashian’s attorneys did not comment on the claims when the lawsuit was filed earlier this year.
SEC Chairman Gary Gensler said in a statement about the regulator’s investigation: “This case is a reminder that, when celebrities or influencers endorse investment opportunities, , including crypto-asset securities, does not mean that such investment products are suitable for all investors.
The settlement follows an SEC warning regarding the disclosure of financial instruments by celebrities. Last year, the regulator published a warning telling investors it was “never a good idea to invest in [special purpose acquisition vehicle] just because someone famous sponsors or invests in it or says it’s a good investment.” In 2017, the agency also called for caution against stars, some of whom have been accused by the SEC, of using social media to promote initial coin offerings. .
The case is also related to the fierce debate surrounding what constitutes digital security and the SEC’s jurisdiction over crypto assets. Gensler reiterated his position to CNBC on Monday: “The law is very clear. I believe based on facts and circumstances most of these tokens are securities. “
Kardashian – who neither acknowledges nor denies the SEC’s findings – violated anti-tender provisions in US securities laws, the agency said.
Her Instagram post reads: “Minutes ago Ethereum Max burned 400 trillion tokens – literally 50% of their admin wallet back to the entire E-Max community,” according to the order. of the SEC. The notice includes a link to the issuer’s website, which contains instructions on how to purchase the token, as well as “#AD”, a term understood to refer to advertisements.
As part of the settlement, for three years Kardashian could receive no compensation for going public with the digital security token and has agreed to continue to cooperate in the investigation, the SEC said.
An attorney representing Kardashian said she has “fully cooperated” with the SEC and stands ready to continue assisting the regulator, adding that she is “delighted” to have the matter resolved.