Kim Kardashian pays $1.3 million fine to SEC for inflating crypto on Instagram

New York
CNN Business
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Kim Kardashian has agreed to pay a $1.26 million fine to the Securities and Exchange Commission to settle civil fees after she labeled the reality TV star encryption The original, EthereumMax, on Instagram.

The SEC has accused Kardashian of not revealing that she was paid $250,000 to post her Instagram post. In addition to paying the fine, she agreed to cooperate with the SEC’s ongoing investigation.

“This case is a reminder that when celebrities or influencers support investment opportunities, including crypto-asset securities, this does not mean that these investment products are suitable for all investors,” said Gary Gensler, President of the SEC. “We encourage investors to consider the potential risks and opportunities of investing in light of their financial goals.”

Kardashian also agreed not to promote any cryptocurrency securities for three years.

“Miss. Kardashian is happy to resolve this matter with the Securities and Exchange Commission,” a statement from her attorney said. “Kardashian has fully cooperated with the SEC from the start and is willing to do everything in her power to help the SEC with this matter. She wanted to put this matter behind her to avoid a long-running dispute. The agreement she reached with the SEC It allows her to do so so that she can move forward with many different businesses.”

The Securities and Exchange Commission found that Kardashian violated the anti-promotion clause of federal securities laws. Kardashian agreed to the order without acknowledging or denying the Securities and Exchange Commission’s findings.

The settlement includes a $1 million fine and forfeiture of the $250,000 payment she received, plus interest.

Gensler chirp That “any incentives from a celebrity or influencer do not necessarily align with yours.” He said that the investing public should not confuse the skills of Famous People “With the very different skills needed to provide appropriate investment advice.”

Charles Whitehead, a professor at Cornell Law School, said the Securities and Exchange Commission may have targeted Kardashian as a way to send a message to other influencers who might promote cryptocurrencies or other investment assets. He described it as a “shot through the arc” for celebrity crypto validators.

“It’s a way of pointing out to other influencers: If you are thinking about doing cryptocurrency, think carefully,” Whitehead said. “The Securities and Exchange Commission is also using it as an influence – but to promote compliance with securities laws. [It’s a] A clever way to draw attention to the matter so others don’t.”

Kardashian isn’t the first celebrity to pay a SEC fine for using their clout to push cryptocurrency. In 2018, boxer Floyd Mayweather Jr. and music producer DJ Khaled both paid cryptocurrency fines. Mayweather, who received $300,000 in compensation, paid fines of just over $600,000, while Khalid, who had paid $50,000, faced penalties of over $150,000. In addition, actor Steven Seagal paid over $300,000 in fines for doing the same in 2020.

On June 13, 2021, Kardashian wrote on Instagram, “Are you interested in cryptocurrency? This is not financial advice but sharing what my friends told me about the ethereum max token!” She added various hashtags, including #ad, along with #emax and #disrupthisstory, among others.

The SEC said it had 225 million followers on Instagram at press time.

In an interview on CNBC Monday, Gensler said the #ad announcement is insufficient to comply with SEC laws regarding the promotion of investments.

“If you’re advertising for fragrances, or you’re advertising for vacation homes or anything else on the Internet, there are different laws involved. But these are the securities laws.

Kardashian’s net worth is estimated at $1.8 billion according to Forbes. So a $1.26 million fine is the equivalent of a less than $100 fine for a typical American family, which has a net worth of about $122,000 according to the latest Federal Reserve estimates.