Kim Kardashian to Pay $1.26 Million in SEC Cryptocurrency Settlement
Kim Kardashian has agreed to pay $1.26 million in penalties, disgorgement, and interest in a settlement with the Securities and Exchange Commission. The SEC charged Kardashian with failing to disclose that she was being paid $250,000 to promote a specific cryptocurrency on Instagram. She has also agreed not to promote any crypto asset securities for three years.
The SEC says Kardashian has agreed to cooperate in its ongoing investigation into the matter, per The Associated Press. Kardashian allegedly failed to disclose to Instagram users that EthereumMax paid her to post about EMAX tokens, a crypto asset security. The link promoted in the post led to EthereumMax’s website, which contained instructions on how to purchase EMAX tokens. The SEC said in its Monday press release that Kardashian’s failure to disclose her payment violates the anti-touting provision of the federal securities laws.
“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,” it reads.
“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 Grewal, director of the SEC’s division of enforcement, said in a statement.
“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,” a lawyer for Kardashian told AP in an email. “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.”
Many celebrities have gotten into the cryptocurrency promotion game. Matt Damon, Gwyneth Paltrow, Reese Witherspoon, and more have all promoted digital currency in recent years. DJ Khaled and Floyd Mayweather Jr. faced similar charges to Kardashian’s in 2018.
“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 said in a statement. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
Gensler added: “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.”