Kim Kardashian was recently charged for touting a cryptocurrency on her Instagram account without disclosing she was paid to promote it. The Securities and Exchange Commission said on Monday that Kardashian agreed to pay a fine of $1 million as well as give back $260,000 which includes her payment from the company with interest.
Kardashian did not deny or admit that the S.E.C.’s findings were accurate.
“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, Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said 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.”
“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,” said SEC chair Gary Gensler.
Kardashian was paid $250,000 to promote cryptocurrency offered by EthereumMax called EMAX tokens. According to SEC regulators, Kardashian’s post “provided instructions for potential investors to purchase EMAX tokens” which violates an “anti-touting provision.”
Kardashian is not the first or only celebrity to promote cryptocurrency. But celebrities who tout cryptocurrency are often criticized. And as more celebrities do, regulators are looking more closely at them to make sure things are fair and rules are followed. For example, the Federal Trade Commission cracked down on social media influencers who don’t disclose that they are paid to promote products.
Kardashian said she would not promote crypto asset securities for three years.
In a statement given to BuzzFeed News, Kardashian’s lawyer said: “Ms. Kardashian is pleased to have resolved this matter with the SEC. 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.”