American superstar Kim Kardashian will pay a $1.26 million fine to the US Securities and Exchange Commission (SEC) for her involvement in promoting a cryptocurrency scheme called EthereumMax (EMAX).
The SEC announced the settlement on Oct. 3 after Kardashian disclosed on social media a crypto asset she had offered and sold EthereumMax without disclosing the amount paid for her participation in the promotion.
The SEC noted that Kardashian failed to disclose $250,000 received for posting promotional posts on her Instagram profile promoting EMAX tokens with a link directing her followers to the project’s website.
The SEC’s order found that Kardashian violated the anti-promotional clause of the federal securities laws, as well as other cryptocurrency securities violations involving the SEC in the past.
Kardashian has neither admitted nor denied the SEC’s findings, but has agreed to a settlement settlement in which she agrees to pay $260,000 in damages in addition to paying a $1 million penalty. Kardashian also agreed not to promote any cryptocurrency until 2025.
Today @employeeKim Kardashian has accused us of illegally promoting crypto security.
This case is a reminder that when celebrities/influencers endorse investments, including crypto-asset securities, it does not mean that these investment products are suitable for all investors.
– Gary Gensler (@GaryGensler) October 3, 2022
@SECGov today accused Kim Kardashian of illegally disclosing crypto security.
This case is a reminder that when celebrities/influencers endorse investment opportunities, including cryptocurrency securities, it does not mean that these investment products are suitable for all investors.
– Gary Gensler (@GaryGensler)
SEC Chairman Gary Gensler also used the order to advise the general public to do due diligence before investing in cryptocurrencies, while also reminding celebrities and influencers of their obligation to disclose payments related to stock promotions.
This case is a reminder that when celebrities/influencers endorse investment opportunities, including cryptocurrency securities, it does not mean that these investment products are suitable for all investors. We encourage investors to consider the potential risks and opportunities of investing in light of their financial goals.”
Kardashian’s legal team also filed a motion to dismiss a class action lawsuit against the businesswoman and other American celebrities in August 2022.
Kardashian posted stories took to Instagram to promote the project in June 2021, with names like boxer Floyd Mayweather and YouTuber Logan Paul also taking part in the process of revealing the EthereumMax token while preparing for a boxing match where they faced off against each other.
Fans can purchase pay-per-view tickets with the token to watch the fight. The token jumped after Kardashian and other influencers were exposed. However, the value of EthereumMax dropped dramatically after that, leaving many investors puzzled.
The original court filing that listed Kardashian, Mayweather and eight other celebrities alleged that company executives hired celebrities to make misleading statements about the token and its circulating supply. Steve Gentile and Giovanni Perone are listed as co-founders of the project.