- The SEC accussed Kim Kardashian of violating the anti-touting provision of the federal securities laws.
- Ms. Kardashian has agreed to pay $1.26 million in total penalty and refraing from further crypto promotions for at least three years.
On Monday, October 3, the U.S.Securites and Exchange Commission (SEC) announced charges against American socialite Kim Kardashian for promoting a crypto asset security offered and sole by EthereumMax, through her social media account.
The SEC order notes that Kardashian failed to disclose that she received $250,000 as a paid promotion to publish a post on her Instagram account about EMAX tokens. Kardashian’s Instagram post also contained a link to the EthereumMax website which offered potential investors the information to purchase EMAX tokens.
As per the SEC order, Kardashian violated the anti-touting provision of the federal securities laws. The federal securities lawmakers it clear that any celebrity promoting a crypto asset security should disclose “the nature, source, and amount of compensation” they receive for the promotion. Investors shall know whether the publicity of security is unbiased. The SEC stated that Ms. Kardashian failed to disclose this information. 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.
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.
Ms. Kardashian agrees to pay the penalty
The recent case dates back to June 2021 last year. Her Instagram post read: “Are you guys into crypto? This is not financial advice but sharing what my friends told me about the Ethereum max token!” At the time of this posting, Kardashian has 225 million Instagram followers.
Ms. Kardashian has agreed to settle all charges and pay a total penalty of $1.26 million including disgorgement, and interest. This includes “approximately $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest, and a $1,000,000 penalty”. furthermore, Ms. Kardashian has also agreed not to promote any crypto asset for a period of three years henceforth. A statement from her attorneys reads:
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.
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