Kim Kardashian has agreed to pay $1.26 million in penalties, disgorgement and interest after charged by the Securities and Exchange Commission (SEC) for a violation of crypto security anti-touting laws.
The 41-year-old's unlawful actions were revealed on Monday, October 3, in a press release by the SEC, stating, Kardashian touted “a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion.”
The SEC's investigation remains ongoing after “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,” to which she linked out to and provided instructions on how to purchase the tokens.
“Kardashian violated the anti-touting provision of the federal securities laws," the statement continued. "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.”
“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,” SEC chair Gary Gensler explained in the official statement. “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,” continued Gensler in an effort to limit similar unlawful situations from happening in the future.
“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," added director of SEC's division of enforcement Gurbir Grewal in the press release. "Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
Following the SEC's official statement, Gensler released a YouTube video urging potential investors to use extreme caution when purchasing products solely based off of celerity and social media-influenced endorsements.
The Hollywood Reporter reported the SEC's charges against Kardashian.