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The Securities and Exchange Commission (SEC) on Monday unveiled charges against Kim Kardashian for touting, on social media, “a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion.” It said Kardashian agreed to settle the charges, pay $1.26 million in penalties, disgorgement and interest, while also cooperating with the SEC’s ongoing investigation.
The SEC’s order found that “Kardashian failed to disclose that she was paid $250,000 to publish a post on her Instagram account about EMAX tokens, the crypto asset security being offered by EthereumMax,” the commission said. Kardashian’s post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
The SEC said in a statement that its order found that “Kardashian violated 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. Kardashian also agreed to not promote any crypto asset securities for three years.”
A statement from Kardashian’s lawyer said, “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.”
The SEC pointed to a previous statement urging caution regarding potentially unlawful celebrity-backed crypto asset offerings here.
“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,” said SEC chair Gary Gensler. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
He 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.”
Gurbir Grewal, director of the SEC’s division of enforcement, added: “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.”
The SEC’s statement urging caution regarding potentially unlawful celebrity-backed crypto asset offerings can be found here. Gensler today published a video warning investors not to make investment decisions based solely on the recommendations of a celebrity or influencer.
Oct. 3, 9:20 a.m. Updated to include a statement from Kardashian’s lawyer.
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