Kim Kardashian paid $1.26 million fine for paid crypto ad, SEC says

WASHINGTON, Oct 3 (Reuters) – Kim Kardashian has promoted everything from appetite-suppressing lollipops to melon-flavored liquor to toilet paper, but it was her foray into the murky world of cryptocurrencies that landed her in hot water.

The reality TV star and influencer has agreed to settle charges of misrepresenting cryptocurrency security and pay $1.26 million in fines and fees, the U.S. Securities and Exchange Commission said Monday.

Kardashian, who has 330 million followers on Instagram and 73.7 million on Twitter, did not disclose that she was paid $250,000 by crypto company EthereumMax to publish an Instagram post about EMAX tokens.

In November 2017, the SEC warned celebrities looking to cash in on the burgeoning digital asset space that US regulations require them to disclose when their cryptotokens are paid.

Since then, several other celebrities have joined, including action star Steven Seagal, music producer DJ Khaled and boxer Floyd Mayweather Jr. for breaking that rule, but Kardashian is arguably the highest profile. read more

His post included a link to the EthereumMax website, which instructs potential investors to purchase EMAX tokens. “I’m sharing what my friends are saying about the EthereumMax token!” read the post.

SEC Chairman Gary Gensler said on Monday that under US law, people promoting a particular stock or cryptocurrency security must disclose not only that they were paid for it, but also the amount, source and nature of those payments.

“It was really to protect the investment community — when someone is promoting these stocks and whether it’s a celebrity or an influencer or something like that, and that’s the basis of what it’s about,” Gensler said in an interview with CNBC.

“I want to acknowledge Miss Kardashian’s cooperation and continued cooperation. We really appreciate that,” Gensler added.

Kardashian agreed to pay the charges without admitting or denying the SEC’s findings. Her attorney, Michael Rhodes, said Kardashian was happy to settle the case.

“He wanted to put this matter behind him to avoid a protracted dispute. His settlement with the SEC allows him to do so so that he can move forward with his many different business pursuits,” Rhodes said in a statement.

ONGOING CLAIMS

Kardashian is also named, along with boxer Mayweather and former basketball star Paul Pierce, in an ongoing lawsuit filed in January by investors who claim they suffered losses after the celebrities promoted EMAX. read more

According to CoinMarketCap.com, EMAX tokens are down about 98% since June 13, 2021, when Kardashian tweeted about them to her then-225 million Instagram followers.

Kardashian, who expanded her footprint in the financial world last month, a new private equity firm was launched focused on investing in consumer and media businesses.

Regulating cryptocurrency markets has been high on the SEC chairman’s agenda this year as digital asset prices have been subject to wild swings due to rising recession fears, rising interest rates and geopolitical turmoil. read more read more

Reporting by Doina Chiacu in Washington, Manya Saini in Bengaluru; Additional reporting by John McCrank in New York; Edited by Louise Heavens, Alexander Smith, and Aurora Ellis

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