Washington: Reality TV star Kim Kardashian paid $1.26 million fine after she was charged with unlawfully promoting an illegal crypto investment scheme on Instagram, the US Securities and Exchange Commission (SEC) said on Monday.
Kardashian has also agreed to not promote any crypto asset securities for three years.
She promoted on social media a crypto asset offered and sold by EthereumMax without disclosing the payment she received for the promotion.
The SEC said that she agreed to settle the charges, pay $1.26 million in penalties, disgorgement, and interest, and cooperate with the Commission’s ongoing investigation.
“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,” Gensler said in a statement.
In a series of posts to her Instagram story, Kardashian asked her followers, “Are you guys into crypto??? This is not financial advice but sharing what my friends just told me about the ethereum max token!”
Her followers were then encouraged to head to the EthereumMax website and “join the E-Max community”.
The SEC 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. Kardashian’s post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
“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,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
“Investors are entitled to know whether the publicity of a security is unbiased, and Kardashian failed to disclose this information,” Grewal said.