The US Securities and Exchange Commission (SEC) charged Kim Kardashian with $1.26 million in penalties for failing to disclose receiving payment for promoting a crypto token on her Instagram page in June 2021. The reality TV star and social media influencer has also been directed to cooperate with the agency’s ongoing investigation.
At the heart of the matter is a payment of $250,000 Kardashian received for publishing a post on her Instagram account about EMAX tokens offered by EthereumMAX. The US regulator has maintained the stance that the crypto asset is a security and Kardashian’s post contained a link to the EthereumMax website, which led potential investors to purchase this security without full understanding.
A number of celebrities have endorsed crypto assets in recent years. The latest ruling is in line with the SEC’s stance that crypto tokens are investment products that come under its regulatory oversight.
SEC Chair Gary Gensler further noted in the agency’s news release that “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.” He added that the SEC encourages investors to “consider an investment’s potential risks and opportunities in light of their own financial goals.”
The SEC chair said that a famous case like this ought to serve as a reminder to celebrities and others that they are legally bound to disclose when and how much they are paid to promote investing in securities. “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,” the press release mentioned, quoting federal securities laws. “Investors are entitled to know whether the publicity of a security is unbiased,” it further said.
While Kim agreed to pay the settlement, the securities debate around crypto continues. While the crypto market is facing a downturn, it is also facing regulatory pressure from agencies like the SEC. The regulator has continued to assert that a majority of crypto assets are, in fact, securities and are required to register under the SEC.