Kardashian paid over $1.2 million to the SEC after promoting the EthereumMax cryptocurrency token.
Kim Kardashian has agreed to pay the Securities and Exchange Commission $1.26 million in penalties to settle charges that she improperly promoted a cryptocurrency token on social media without disclosing how much she was paid for the promotion, the SEC announced Monday.
Kardashian posted an Instagram story in June 2021 inviting her 328 million followers to invest in EthereumMax. She wrote in her story, “This is not financial advice.” However, I would like to share what my friends just told me about the Ethereum Max token! ” In addition to other hashtags, she included “ad.”
Kardashian was among the many celebrities who participated in the 2017 crypto craze, which included intense interest in and advertising for cryptocurrencies and related technologies, as well as funding for these ventures.
Cryptocurrencies, such as Bitcoin, are digital assets that can be bought and sold on cryptocurrency exchanges. EthereumMax is a cryptocurrency token, which is an asset that can be traded and is based on existing cryptocurrency technology. It was one of several tokens that raised suspicions among skeptics due to its extensive online promotion.
Gary Gensler, chairman of the Securities and Exchange Commission, stated in a press release announcing the charges that the law requires celebrities to “disclose when and how much they are paid to promote investing in securities.”
According to the SEC, Kardashian failed to disclose that she was compensated $250,000 to promote the token.
According to the SEC press release, Kardashian did not admit wrongdoing in the settlement, but she agreed not to advertise anything crypto-related for the next three years.
Eric Chaffee, a renowned university professor at the University of Toledo College of Law, stated that Kardashian could have argued that “#ad” is sufficient to satisfy the SEC’s rules. However, in its filing against Kardashian, the SEC noted that the Securities Act explicitly requires the disclosure of the amount received for the publicity of security.
Chaffee stated that, due to Kardashian’s decision to settle the case, any nuance regarding how the SEC may view such cases will be lost for the time being.
Until then, the SEC will likely maintain a strict stance regarding the need for clear language describing how a celebrity is compensated for promoting any asset, digital or otherwise, he said.
Kardashian and EtheriumMax representatives did not immediately respond to requests for comment.
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