The U.S. Securities and Exchange Commission (SEC) is charging Kim Kardashian for "unlawfully touting" a "crypto security," the agency announced on Monday morning. The SEC says that Kardashian was in violation of its rules when she promoted a "crypto asset security offered and sold by EthereumMax" without the necessary disclosure that she was paid to promote it.
Kardashian has already agreed to settle the case, with a $1.26 million penalty payment, and to help the SEC with its ongoing investigation.
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.
This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.
— Gary Gensler (@GaryGensler) October 3, 2022
The agency specified that Kardashian should have disclosed a $250,000 payment she received to publish a post about EthereumMax's EMAX tokens on her Instagram account. The settlement reached with the SEC by Kardashian includes a $260,000 payment that represents that original amount, plus interest, as well as $1 million in penalties.
SEC Chair Gary Gensler separately posted a message on Twitter about the settlement, noting that celebrity endorsements should not be construed as financial advice. This could be a shot across the bow that indicates more enforcement activity is on the table for high-profile celebs who rode the crypto wave by touting specific assets to fans.
Gensler has repeatedly expressed the opinion that crypto assets fall under existing securities laws, as do other new technologies that mirror traditional securities in form and function. This is definitely an attention-grabbing way to put the SEC's regulatory force where Gensler's mouth is.
Kardashian provided the following statement about the charges and the settlement via her representation:
Ms. Kardashian is pleased to have resolved this matter with the SEC. Kardashian 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. She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.