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Kim Kardashian pays $1.3 million fine to SEC for hyping crypto on Instagram

New York
CNN Business

Kim Kardashian agreed to pay a $1.26 million fine to the Securities and Exchange Commission to settle civil charges after the reality TV star touted a crypto asset, EthereumMax, on Instagram.

The SEC charged Kardashian with failing to disclose that she was paid $250,000 to publish her Instagram post. In addition to paying the fine, she agreed to cooperate with the SEC’s ongoing investigation.

“This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto-asset securities, that doesn’t mean those investment products are right for all investors,” SEC Chairman Gary Gensler said. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”

Kardashian also agreed not to market any crypto securities for three years.

“Ms. Kardashian is pleased to have resolved this matter with the SEC,” a statement from her lawyers said. “Kardashian cooperated fully with the SEC from the very beginning, and she remains willing to do everything she can to assist the SEC in this matter. “She wanted to get this matter behind her to avoid a protracted dispute. The settlement she reached with the SEC allows her to do that so she can move forward with her many different business activities.”

The SEC found that Kardashian violated the anti-touting provision of federal securities laws. Kardashian agreed to the order without admitting or denying the SEC’s findings.

The settlement includes a $1 million fine and forfeiture of the $250,000 payment she received, plus interest.

Executioner tweeted that “every celebrity or influencer’s incentives are not necessarily aligned with yours.” He said the investing public should not confuse the skills of celebrities “with the very different skills needed to offer appropriate investment advice”.

The SEC may have targeted Kardashian as a way to send a message to other influencers who may promote cryptocurrencies or other investment vehicles, said Charles Whitehead, a professor at Cornell Law School. He called it a “shot across the bow” for celebrity crypto endorsers.

“It’s a way to signal to other influencers: if you’re thinking about dealing in crypto, think twice,” Whitehead said. “The SEC is also using her as an influencer – but to increase compliance with securities laws. [It’s a] smart way to bring attention to the issue so others don’t.”

Kardashian isn’t the first celebrity to pay an SEC fine for using her influence to push cryptocurrencies. In 2018, boxer Floyd Mayweather Jr. paid and music producer DJ Khaled fined for pushing crypto. Mayweather, who had been compensated $300,000, paid a little more than $600,000 in penalties, while Khaled, who had been paid $50,000, was hit with penalties of over $150,000. In addition, actor Steven Segal paid more than $300,000 in penalties for doing the same in 2020.

– Source: CNN Business

Feeling crypto FOMO? Fraudsters count on it

In an Instagram post on June 13, 2021, Kardashian wrote: “Are you guys into crypto? This is not financial advice but sharing what my friends told me about ethereum max token!” She added various hashtags, including #ad, along with #emax and #disrupthistory, among others.

The SEC said she had 225 million Instagram followers at the time of the post.

The #ad is not sufficient to comply with SEC rules regarding the purchase of investments, Gensler said in an interview on CNBC on Monday.

“If you advertise perfume, or you advertise holiday homes or anything else on the internet, there are different laws related to that. But these are the securities laws, he said.

Kardashian’s net worth is estimated at $1.8 billion according to Forbes. So a $1.26 million fine equates to a fine of less than $100 for a typical American family, which has a net worth of about $122,000 according to the latest Federal Reserve estimates.

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