The Securities and Exchange Commission announced that Kim Kardashian had created posts on social media touting a crypto asset security by EthereumMax, without disclosing a payment for promoting the security. Kim then agreed to pay $1.26 million in penalties, disgorgement and interest, and to cooperate with the SEC’s investigation.
The SEC has accused Kim Kardashian of not mentioning she was paid $250,000 to publish a post on her Instagram account about EMAX tokens. Her post contained links to the EthereumMax website which provided instructions for potential investors to purchase EMAX 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,” said SEC Chair Gary Gensler. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
“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,” Chair Gensler added.
“The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
Celebrities that endorse crypto assets may be violating the anti-touting law. The SEC fined Kim Kardashian $1.2 million after she promoted a crypto asset without disclosing that she got paid. She was prohibited from endorsing any crypto-related assets for 3 years.
The Securities and Exchange Commission’s investigation into the events is still ongoing, supervised by the CESA’s Crypto Assets and Cyber Unit and New York Regional Office. It has been a joint effort between the Enforcement Division’s specialist teams.
The SEC has a statement regarding celebrity-backed crypto assets. Gensler has cautioned investors to not rely solely on the advice of celebrities or influencers.
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