Kim Kardashian has promoted everything from appetite-suppressing lollipops
to melon-flavored liqueur to toilet paper, but it was her foray into the
murky world of cryptocurrencies that got her into hot water.
The
reality television star and influencer has agreed to settle charges of
unlawfully touting a crypto security and to pay $1.26 million in penalties
and fees, the U.S. Securities and Exchange Commission said on Monday.
Kardashian, who has 330 million followers on Instagram and 73.7
million followers on Twitter, failed to disclose that she was paid $250,000
by crypto company EthereumMax to publish an Instagram post about its EMAX
tokens, the SEC said.
The SEC in November 2017 warned celebrities
looking to cash in on the emerging digital asset space that U.S. rules
require they disclose when they are being paid to endorse crypto
tokens.
Since then it has pursued a handful of other celebrities,
including action film star Steven Seagal, music producer "DJ Khaled" and
boxer Floyd Mayweather Jr. for breaking that rule, but Kardashian is
arguably the most high profile. read more
Her post contained a
link to the EthereumMax website, which provided instructions for potential
investors to purchase EMAX tokens. "Sharing what my friends just told me
about the EthereumMax token!" the post read.
Under U.S. law,
people who tout a certain stock or crypto security need to disclose not only
that they are getting paid to do so, but also the amount, the source and the
nature of those payments, SEC Chair Gary Gensler said on Monday.
"This was really to protect the investing public - when
somebody is touting that stock and whether that's a celebrity or an
influencer or the like, and that's at the core of what this is about,"
Gensler said in an interview with CNBC.
"I want to acknowledge
Miss Kardashian cooperating and ongoing cooperation. We really appreciate
that," Gensler added.
Kardashian has agreed to pay the charge
without admitting or denying the SEC's findings. Her lawyer Michael Rhodes
said Kardashian was pleased to have resolved the case.
"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," Rhodes said in a
statement.
ONGOING LAWSUIT
Kardashian is also named, along with boxer Mayweather and
former basketball star Paul Pierce, in an ongoing lawsuit filed in January
by investors who allege they suffered losses after the celebrities promoted
EMAX. read more
EMAX tokens have declined around 98% since June
13, 2021, when Kardashian posted about them on Instagram to her then 225
million followers, according to the website CoinMarketCap.com.
Last month, Kardashian, who has expanded her footprint in the
world of finance, launched a new private equity firm focused on investing in
consumer and media businesses.
Regulating cryptocurrency markets
has been high on the SEC chair's agenda this year, as prices of digital
assets suffer wild swings due to heightened recession fears, rising interest
rates and geopolitical turmoil.
