The Securities and Exchange Commission(SEC), today filed charges against Kim Kardashian for promoting a crypto asset security that was offered and sold by EthereumMax on social media without disclosing the compensation she received for the promotion.
According to the SEC’s press release, the reality tv star failed to disclose that she received $250,000 from EthereumMax to write a post regarding EMAX tokens on her Instagram account. A link in Kardashian’s tweet led to the EthereumMax website, where prospective investors could find instructions on how to buy EMAX tokens.
In exchange for dropping the charges, Kim has agreed to assist with the commission’s ongoing investigation, pay $1.26 million in fines, disgorgement, and interest, and pay the penalty. The SEC Chairman,Gary Gensler stated that the case will serve as a warning to investors that a celebrity or influential person’s recommendation of investment possibilities, including securities backed by crypto assets, doesn’t indicate that those products are suitable for all investors.
He also advised investors to take their personal financial objectives into account when evaluating an investment’s possible risks and opportunities.
Director of the SEC’s Division of Enforcement, emphasized that the federal securities laws have been made clear that any public figure or other person who promotes a cryptocurrency asset security must disclose the type, source, and amount of compensation they received in exchange for the promotion. Investors have a right to know if a security’s publicity is objective,which Kim Kardashian failed to provide.
Kardashian agreed to pay the aforementioned $1.26 million, which included about $260,000 in disgorgement (which represents her promotional money), plus prejudgment interest, along with a $1,000,000 penalty, without admitting or contesting the SEC’s findings. Kardashian also consented to refrain for three years from endorsing any cryptocurrency-related securities.
In a video issued today, SEC Chair Gensler cautioned investors against basing their investment choices only on the advice of well-known people or influential figures.
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