Reality TV star Kim Kardashian has agreed to pay $1.26 million to settle Securities and Exchange Commission charges that she broke securities law by touting a crypto token without disclosing she was paid for the promotion, the agency announced today.
Kardashian was paid $250,000 to post an ad on her Instagram account about EMAX tokens, which is offered by EthereumMax. Her post contained a link to the company’s website, which provided instructions for potential investors to purchase EMAX tokens.
Kim Kardashian (Bloomberg)
Kardashian, who has 331 million followers on Instagram and a net worth of $1.8 billion according to Forbes, did not admit or deny the charges, but agreed to pay the $1.26 million, including about $260,000 in disgorgement, plus prejudgment interest and a $1,000,000 penalty, the SEC said. Kardashian also agreed not to promote any crypto asset securities for three years.
"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," SEC Chairman Gary Gensler said in a statement. "We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals. ... Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities."
In a newly released SEC video on celebrity endorsements he posted on Twitter, Gensler said such endorsements even mean an investment is “legitimate” and warned investors not to conflate a celebrity’s star power with their ability to choose investments.
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement that investors are “entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information."
Grewal said federal securities laws make clear “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.”
Bloomberg News quoted Patrick Gibbs, a partner at the law firm Cooley who represents Kardashian, as saying she settled the matter “so that she can move forward with her many different business pursuits.” Gibbs said she “fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the SEC in this matter,” Bloomberg reported.