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SEC Fines Kim Kardashian for Unlawful Crypto Promotion

The Securities and Exchange Commission announced charges against celebrity reality star and online influencer Kim Kardashian.

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The Securities and Exchange Commission announced charges against celebrity reality star and online influencer Kim Kardashian for an undisclosed paid endorsement of a crypto asset security offered and sold by EthereumMax.

Kardashian agreed to settle the charges and pay $1.26 million in penalties, disgorgement and interest, and cooperate with the commission’s ongoing investigation.

The SEC has previously charged other celebrity influencers, such as Steven Seagal in 2020, for similar undisclosed security offering endorsements.

The SEC claims Kardashian failed to disclose that she was paid $250,000 to publish a post on her Instagram account in which she endorsed investment in EMAX tokens, the crypto asset security being offered by EthereumMax. Kardashian’s post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.

“Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities,” said SEC chair Gary Gensler.

The SEC’s order finds that Kardashian violated the anti-touting provision of the federal securities laws. Without admitting or denying the SEC’s findings, Kardashian agreed to pay the $1.26 million and agreed to not promote any crypto asset securities for three years.

“The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. “Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”

The SEC also released a statement urging caution regarding potentially unlawful celebrity-backed crypto asset offerings.

Gensler published a video in which he warned investors to not make investment decisions based solely on the recommendations of a celebrity or influencer.

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