WASHINGTON, Oct 3 (Reuters) – Kim Kardashian has promoted everything from appetite-suppressing lollipops to melon-flavored liquor to toilet paper, but her foray into the murky world of cryptocurrencies has landed her in hot water.
The reality TV star and influencer has agreed to settle charges of illegally discussing crypto securities and pay $1.26 million in fines and fees, the U.S. Securities and Exchange Commission said Monday.
Kardashian, who has 330 million followers on Instagram and 73.7 million on Twitter, failed to disclose that she was paid $250,000 by crypto firm EthereumMax to publish an Instagram post about her EMAX tokens, the SEC said.
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In November 2017 the SEC warned celebrities looking to get into the growing digital asset space that US rules require them to disclose when they endorse crypto tokens.
Since then, it has gone after a handful of celebrities, including action movie star Steven Seagal, music producer “DJ Khaled” and boxer Floyd Mayweather Jr., for breaking the rule, but Kardashian stands out the most. read more
His post included a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens. “I’m sharing what my friends told me about EthereumMax Token!” Read the post.
Under US law, people talking about a particular stock or crypto security must disclose not only that they are being paid to do so, but also the amount, source and nature of those payments, SEC Chairman Gary Gensler said on Monday.
“It was really about protecting the investing public — when somebody talks about that stock, whether it’s a celebrity or an influencer or something like that, that’s at the heart of what it’s all about,” Gensler said in an interview with CNBC.
Kim Kardashian arrives on the red carpet at the White House Correspondents’ Association Annual Dinner on April 30, 2022 in Washington, United States. REUTERS/Tom Brenner
“I want to acknowledge Miss Kardashian’s cooperation and continued cooperation. We greatly appreciate that,” Gensler added.
Kardashian agreed to pay the fee without admitting or denying the SEC’s findings. Her lawyer, Michael Rhodes, said Kardashian was happy to settle the case.
“She wanted to put this matter behind her to avoid protracted litigation. Her agreement with the SEC allows her to do so so she can move forward with her various business pursuits,” Rhodes said in a statement.
A case in progress
Kardashian is named along with boxer Mayweather and former basketball star Paul Pierce in a lawsuit filed in January after investors claimed they suffered losses after celebrities promoted EMAX. read more
EMAX tokens are down about 98% since June 13, 2021, when Kardashian posted them to her 225 million Instagram followers, CoinMarketCap.com website reported.
Last month, Kardashian expanded her footprint in the financial world by launching a new private equity firm focused on investing in consumer and media businesses.
Regulating cryptocurrency markets is high on the SEC chair’s agenda this year as prices of digital assets experience sharp fluctuations due to heightened recession fears, rising interest rates and geopolitical turmoil. Read more Read more
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Reporting by Doina Chiaku in Washington, Manya Saini in Bengaluru; Additional reporting by John McCrank in New York; Editing by Louise Heavens, Alexander Smith and Aurora Ellis
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