Kim Kardashian has found that there is a price to be paid when influencers give investment opportunities like cryptocurrency to their adoring fans without disclosing that they are paid to do so.
The Securities and Exchange Commission announced a $1.26 million payout Monday morning to the celebrity for failing to disclose that she was paid $250,000 to promote a cryptocurrency token. tokens sold by EthereumMax.
Ms. Kardashian promoted the crypto product as a good investment on her Instagram page in June 2021.
Ms. Kardashian, 41, became famous for her family’s reality TV show that chronicles their daily lives. One of the highlights of her brand is advertising the products she uses and wears.
Last year, several celebrities began endorsing crypto assets in advertisements. The SEC has warned many times that investors should not buy any investment simply because it has the backing of a celebrity. Regulators have a long history of pursuing paid celebrities and others for failing to disclose that they were compensated for promoting an investment product.
During the pandemic, a large number of celebrities and athletes join forces with promoters of special purpose acquisition companies, or SPACs. That prompted the SEC to issue a warning warning investors to be wary of short-testing company stock offerings.
“Multiple sclerosis. The Kardashian case 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 their head. invest in securities,” said Gary Gensler, chair of the SEC, in a statement announcing the settlement.
Patrick Gibbs, an attorney for Ms. Kardashian, said in a statement that his client was “delighted to resolve this matter with the SEC” and that the agreement allowed her to continue pursuing her business.
In her Instagram post from June 2021, Ms. Kardashian began by telling her followers: “This is not financial advice but sharing what my friends just told me about it. EthereumMax token!”
The SEC has maintained that crypto tokens are investment products subject to its regulatory scrutiny.
inside settlement order Kardashian, the SEC said she was paid by EthereumMax through an intermediary. The SEC also said it has considered cooperating with regulators for Ms. Kardashian and that she continues to cooperate with the investigation.