SEC Charges Kim Kardashian for Touting Crypto Without Disclosing Payment, Agrees to $1.26 Million Fine
The U.S. Securities and Exchange Commission has been keeping up with Kim Kardashian’s Instagram posts, and it’s going to cost her over a million dollars.
Monday, the SEC announced that Kardashian had been charged with “unlawfully touting a crypto security” and had agreed to pay a $1.26 million fine, cooperate with the agency’s ongoing investigation, refrain from promoting crypto assets for three years.
The trouble relates to a June 2021 Instagram post in which Kardashian promoted EthereumMax’s “EMAX” tokens to her millions of followers without disclosing that she had been paid $250,000 to do so. Including the hashtag “#ad” in the text of her post was not sufficient disclosure under federal securities laws, the SEC argued, which require anyone promoting the sale of securities to disclose if they were paid to promote that asset. The purpose of these regulations is “to help investors know when a person has a conflict of interest that might affect their recommendation to buy or sell a security,” wrote the Wall Street Journal’s Dave Michaels.
Kardashian’s fine represents the $250,000 payment she received from EthereumMax, plus interest, and a $1 million penalty, according to CNBC. She was not required to admit or deny the SEC’s accusations in order to settle the matter, and her attorney issued the following statement:
Kardashian fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the SEC in this matter. She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.
SEC Chairman Gary Gensler took to social media himself to announce the charges and settlement on Twitter, writing that the case was “a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors,” and including a two-minute video message.
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.
This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.
— Gary Gensler (@GaryGensler) October 3, 2022
CNN chief business correspondent Christine Romans covered the story on CNN Newsroom Monday morning, telling anchors Poppy Harlow and Jim Sciutto that Gensler was making it clear that the SEC’s job was to “help protect investors” even regarding these new developments in cryptocurrency. Gensler dismissed the notion that crypto was some sort of unregulated “Wild West,” instead characterizing it as falling firmly within the regulatory powers of “good old fashioned securities law,” as Romans described it.
In his video, said Romans, Gensler was “really encouraging investors to remember just because a celebrity says it’s a good investment product does not mean it is, especially if you don’t know that person is being paid.”
“This is kind of a new frontier for the SEC, the crypto arena,” she concluded, and Gensler has said “this is an arena they are looking to regulate because it is their job to help investors, to protect investors, and crypto is just like — it’s just like the ’20s or the ’30s — it is something that people are rushing after and they need to be protected.”
Kardashian is not the first celebrity to get hammered by the SEC. Boxer Floyd Mayweather and music producer DJ Khaled were both fined in 2018 for a similar failure to disclose payments they received to tout initial crypto coin offerings, according to Bloomberg. , and actor Steven Seagal paid a $314,000 settlement in 2020 for failing to disclose what he was paid to hype sales of a crypto token, according to the Wall Street Journal.
Watch above via CNN.