The Securities and Exchange Commission (SEC) has fined Kim Kardashian for failing to disclose a payment she received in exchange for endorsing a cryptocurrency asset on Instagram.
According to the SEC’s announcement, the American media personality received a reported $250,000 payment to promote EthereumMax’s EMAX tokens on her website; however, she failed to disclose this payment.
She broke federal securities laws, according to the SEC, by failing to disclose the commission she received for the endorsement.
According to the federal regulator, Kardashian settled the claims by pledging to pay $1.26 million, which included the $250,000 she received for the promotion, $100,000 in interest, and a $100,000 penalty.
Kardashian stated that she would assist the ongoing investigation and would refrain from endorsing any cryptocurrency products for three years, but she did neither admit nor deny any wrongdoing.
Kardashian had initially posted the promotion on her Instagram page in June last year. In her post, Kardashian stated, “ARE YOU INTO CRYPTO??? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN.”
The advertisement featured the hashtag “#ad” and a link to the EthereumMax website, which the SEC claimed contained information on how to buy the tokens.
Even before the SEC got involved, the post drew a lot of attention. Investors sued Kardasian along with former NBA player Paul Pierce and boxer Floyd Mayweather Jr. on the grounds that the celebrities had artificially inflated the asset’s value.
A video accompanying the SEC’s announcement showed SEC Chair Gary Gensler taking advantage of the high-profile occasion to discuss celebrity endorsements of cryptocurrency products.
“Celebrity endorsements don’t mean that an investment product is right for you, or even frankly, that it’s legitimate,” Gensler said.
Even if a celebrity’s endorsement is sincere, each investment has its own risks and opportunities and might not suit your needs in terms of investments, he continued.
We may enjoy watching these performers, he said, but we “shouldn’t confuse these skills with the very different skills needed to offer appropriate financial advice.”