Kim Kardashian has agreed to pay a $1.26 million fine to the Securities and Exchange Commission to settle civil charges after the reality TV star touted a crypto asset, EthereumMax, on Instagram.
The SEC accused Kardashian of failing to disclose that she was paid $250,000 to post her Instagram post. In addition to paying the fine, she agreed to cooperate with the SEC’s ongoing investigation.
“This case reminds us 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,” the chairman said. of the SEC, Gary Gensler. “We encourage investors to consider the potential risks and opportunities of an investment in light of their own financial objectives.”
Kardashian also agreed not to promote any crypto titles for three years.
“Ms. Kardashian is pleased to have resolved this matter with the SEC,” a statement from her attorneys said. “Kardashian has cooperated fully with the SEC from the outset and she remains willing to do whatever she can to assist the SEC in this matter. She wanted to put this matter behind her to avoid a protracted dispute. The agreement she entered into with the SEC allows her to do so so that she can move forward with her many different business activities.
The SEC found that Kardashian violated the anti-soliciting provision of federal securities laws. Kardashian accepted the order without admitting or denying the SEC’s findings.
The settlement includes a $1 million fine and forfeiture of the $250,000 payment she received, plus interest.
people tweeted that “a celebrity or influencer’s incentives are not necessarily aligned with yours”. He said the investing public shouldn’t confuse celebrity skills “with the very different skills needed to offer proper investment advice.”
The SEC may have targeted Kardashian as a way to send a message to other influencers who may be promoting cryptocurrencies or other investment assets, said Charles Whitehead, a professor at Cornell Law School. He called it “a punch in the bow” for celebrity endorsers.
“It’s a way of signaling to other influencers: if you’re considering getting into crypto, think twice,” Whitehead said. “The SEC also uses her as an influencer – but to enforce compliance with securities laws. [It’s a] smart way to draw attention to the subject so that others don’t.
Kardashian isn’t the first celebrity to be fined by the SEC for using her influence to push cryptocurrencies. In 2018, boxer Floyd Mayweather Jr. and music producer DJ Khaled each paid fines for pushing crypto. Mayweather, who was compensated $300,000, paid just over $600,000 in penalties, while Khaled, who was paid $50,000, was hit with penalties exceeding $150,000. Additionally, actor Steven Segal paid over $300,000 in penalties for doing the same thing in 2020.
– Source: CNN Business
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In a June 13, 2021 Instagram post, Kardashian wrote, “Love crypto? This is not financial advice but a sharing of what my friends told me about the Ethereum Max token! She added different hashtags, including #ad, as well as #emax and #disrupthistory, among others.
The SEC said it had 225 million Instagram followers at press time.
#Advertising is not enough to comply with SEC laws regarding investment promotion, Gensler said in an interview on CNBC on Monday.
“If you’re advertising perfume, or you’re advertising vacation homes or anything else on the internet, there are different laws about that. But it’s the securities laws,” he said.
Kardashian’s net worth is estimated at $1.8 billion according to Forbes. So a fine of $1.26 million equates to a fine of less than $100 for a typical American family, which has a net worth of around $122,000 according to the Federal Reserve’s most recent estimates.