Kim Kardashian will pay $1.26 million in penalties as a settlement with the US Securities and Exchange Commission (SEC), the regulator announced on Monday.
As per the SEC’s press release, the reality TV superstar had agreed to settle with the securities regulator following charges over her unlawful promotion of EthereumMax, which according to the agency, is a crypto security token.
SEC notes that Kardashian touted the cryptocurrency on social media and failed to disclose the $250,000 payment she received from the project to advertise EthereumMax’s token EMAX via her Instagram account.
The order against the global influencer points out that her post also linked to the EthereumMax website, where potential investors were given more instructions on how to buy the tokens.
SEC Chair Gary Gensler said in a statement:
“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.”
Violation of securities laws
Gurbir S. Grewal, the Director of SEC’s Division of Enforcement, said federal securities laws clearly stipulates what should happen in cases where individuals promote crypto assets to potential investors.
“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…Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
Kardashian, who did not admit or deny the SEC’s findings, has agreed to settle with the regulator. The $1.26 million fine includes a $1,000,000 penalty and $260,000 in disgorgement and prejudgment interest, according to the SEC release.
As well agreeing cooperate with the SEC investigation, Kardashian will not advertise any crypto securities for the next three years.
The SEC order against Kardashian is the latest against a celebrity crypto promoter, with notable personalities to get into crosshairs with the agency including boxer Floyd Mayweather and actor Steven Seagal.
Kardashian and Mayweather were sued earlier this year by EthereumMax investors for their role in promoting the token.
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