The U.S. SEC Has Charged Kim Kardashian for Her Unlawful Promotion of EthereumMax
The U.S. Securities and Exchange Commission (SEC) slapped charged on Kim Kardashian for promoting a crypto asset security on social media sold by EthereumMax without disclosing the payment that she received for the promotion.
Kardashian had agreed to settle the charges and pay a sum total of $1.26 million in penalties, disgorgement, and interest. She has also agreed to cooperate on SEC’s ongoing investigation.
As per the SEC order, Kim Kardashian was paid $250,000 to publish a post on her Instagram account about EMAX tokens, offered by EthereumMax. Her post also contained a link to the EthereumMax website that offered instructions for investors to purchase the EMAX tokens.
Speaking on the development, SEC Chair Gary Gensler said: "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. We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
He further added that the recent case is a reminder to celebrities that law will require them to disclose to the public that they have been paid for the promotion. The SEC found Kardashian violating the anti-touting provision of the federal securities laws.
Kardashian has decided not to put any counter to the SEC’s charges and pay the entire penalty in full. This includes “approximately $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest, and a $1,000,000 penalty”. Besides, she has also agreed to not promote any other cryptocurrency for at least a period of three years.
The attorneys representing Ms. Kardashian said: “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.”
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said: "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. Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”