Kim Kardashian Pays $1.26M Fine for Paid Crypto Ad, SEC Says

WASHINGTON, Oct 3 (Reuters) – Kim Kardashian has promoted everything from appetite-suppressing lollipops to melon-flavored liqueur to toilet paper, but it was her foray into the murky world of cryptocurrencies that landed her in hot water.

The reality TV star and influencer has agreed to settle charges of illegally naming a cryptocurrency and to pay $1[ads1].26 million in penalties and fees, the U.S. Securities and Exchange Commission said Monday.

Kardashian, who has 330 million followers on Instagram and 73.7 million followers on Twitter, failed to disclose that she was paid $250,000 by crypto company EthereumMax to publish an Instagram post about the EMAX tokens, the SEC said.

In November 2017, the SEC warned celebrities looking to cash in on the new digital asset space that US rules require them to disclose when they are paid to endorse crypto tokens.

Since then, it has gone after a handful of other celebrities, including action star Steven Seagal, music producer DJ Khaled and boxer Floyd Mayweather Jr. for breaking that rule, but Kardashian is arguably the most high-profile. read more

Her post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens. “Sharing what my friends just told me about the EthereumMax token!” post read.

Under US law, people selling a particular stock or cryptocurrency 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 Monday.

“This was really to protect the investing public — when somebody claims the stock and whether it’s a celebrity or an influencer or the like, and that’s the heart of what this is about,” Gensler said in an interview with CNBC.

“I want to acknowledge Miss Kardashian’s collaboration and ongoing collaboration. We really appreciate it,” Gensler added.

Kardashian has agreed to pay the charges without admitting or denying the SEC’s findings. Her lawyer Michael Rhodes said Kardashian was pleased to have resolved the case.

“She wanted to put this case behind her to avoid a protracted dispute. The settlement she reached with the SEC allows her to do so so she can move forward with her many different business activities,” Rhodes said in a statement.

ONGOING LITIGATION

Kardashian is also named, along with boxer Mayweather and former basketball star Paul Pierce, in an ongoing lawsuit filed in January by investors who claim they suffered losses after the celebrities promoted EMAX. read more

EMAX tokens have fallen about 98% since June 13, 2021, when Kardashian posted about them on Instagram to her then 225 million followers, according to website CoinMarketCap.com.

Last month, Kardashian, who has expanded her footprint in the financial world, launched a new private equity firm focused on investing in consumer and media companies.

Regulation of cryptocurrency markets has been high on the SEC chief’s agenda this year, as digital asset prices suffer wild swings due to heightened fears of recession, rising interest rates and geopolitical turmoil. read more read more

Reporting by Doina Chiacu 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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