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Kim Kardashian has been charged by the Securities and Exchange Commission (SEC) for advertising on social media "a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion.” Her Instagram post included a link to the EthereumMax website which provided instructions for potential investors to buy EMAX tokens. According to the Hollywood Reporter, the SEC revealed the charges against the reality tv star on Monday, October 3rd.
The SEC said Kardashian agreed to settle the charges as well as pay $1.26 million in penalties, disgorgement and interest, and cooperate with their ongoing investigation. Their order found that "Kardashian failed to disclose that she was paid $250,000 to publish a post on her Instagram account about EMAX tokens, the crypto asset security being offered by EthereumMax."
In a statement from the SEC, they explained “Kardashian violated the anti-touting provision of the federal securities laws. Without admitting or denying the SEC’s findings, Kardashian agreed to pay the aforementioned $1.26 million, including approximately $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest, and a $1,000,000 penalty. Kardashian also agreed to not promote any crypto asset securities for three years.”
The SEC chair Gary Gensler added, "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. We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
He added, "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.”