Kim Kardashian agreed to pay a $1.26 million fine to the Securities and Exchange Commission to settle civil charges after advertising a cryptocurrency called EthereumMax on Instagram.
According to the SEC, Kardashian failed to disclose that she was paid $250,000 to post on Instagram. She also agreed to assist the SEC with its continuing investigation and pay the penalties.
“This lawsuit serves as a warning that just because a celebrity or important person supports an investment opportunity, including crypto asset securities, does not mean it is appropriate for all investors,” said Gary Gensler, the SEC’s chairman. “We advise investors to consider the risks and opportunities of an investment in light of their personal financial goals.”
Kardashian has committed not to promote any crypto securities for the next three years.
Her lawyers stated in a statement, “Ms. Kardashian is relieved to have reached an agreement with the SEC.”
Kardashian has been entirely honest with the SEC from the beginning, and she is still prepared to do whatever she can to assist the SEC with this matter. She wished to resolve this situation promptly so that it did not linger. The agreement she reached with the SEC allows her to do so, allowing her to proceed with her numerous business ideas.
The SEC determined that Kardashian violated a law prohibiting the promotion of a corporation. Kardashian agreed to the ruling without agreeing or disagreeing with the SEC’s findings.
As part of the settlement, she must pay a $1 million fine and return the $250,000 she received, plus interest.
Gensler stated on Twitter that “any celebrity or important person’s aspirations may not be the same as yours.” He stated that people who want to invest should not believe that the abilities of celebrities are the same as the skills required to provide appropriate investment advice.
According to Charles Whitehead, a professor at Cornell Law School, the SEC may have pursued Kardashian to send a message to other influencers who may be advocating crypto currencies or other investment commodities. He called it a “shot across the bow” to celebrities who embrace cryptocurrencies.
“It’s a way to convey a message to other influencers: if you’re considering about dealing with crypto, you might want to think twice,” Whitehead explained. ” The SEC is also using her to compel people to follow the law. It’s a wonderful technique to attract people’s attention so they don’t do it again.”
Kardashian isn’t the first celebrity to be penalized by the SEC for leveraging their celebrity to promote cryptocurrency. Floyd Mayweather Jr. and DJ Khaled were both fined for promoting cryptocurrency in 2018. Mayweather, who was paid $300,000, had to pay a little more than $600,000 in fines, while Khaled, who was paid $50,000, had to pay more than $150,000 in fines. Actor Steven Segal was also fined more than $300,000 for performing the same thing in 2020.
Kim said on Instagram on June 13, 2021, “Are you interested in cryptocurrency? This is not financial advice, but rather what my friends told me about the Ethereum Max token.” She used several hashtags, including #ad, #emax, #disrupthistory, and others.
The SEC stated that at the time of the post, she had 225 million Instagram followers.
In an interview with CNBC on Monday, Gensler stated that the commercial did not do enough to fulfill SEC guidelines when it comes to advocating investing.
“There are a number of laws that you must obey whether you market perfume, vacation homes, or anything else on the internet.” “He said.
Kardashian’s net worth is estimated to be $1.8 billion, according to Forbes. So, a $1.26 million charge is equivalent to a fine of less than $100 for a typical US household, which, according to the Federal Reserve’s most current estimates, has a net worth of roughly $122,000.