Kim Kardashian’s cryptocurrency misadventure has landed her in hot water with federal regulators.
The reality TV superstar and influencer has settled charges by the Securities and Exchange Commission that she failed to disclose a payment she received for advertising a crypto asset on her Instagram feed, the agency announced Monday morning.
“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 suitable for all investors,” said Gary Gensler, chairman of SEC in a press release. .
Kardashian, who is said to be worth $1.8 billion, agreed to pay $1.26 million to settle allegations about an Instagram promotion of Meta’s crypto asset EthereumMax, the SEC said. It will also cooperate with an ongoing investigation and has agreed not to promote crypto securities for three years, the regulator added.
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However, Kardashian, who has built a media and lifestyle empire, neither accepted nor denied the regulator’s findings, the SEC said.
In a statement, an attorney for Kardashian said she is pleased to have settled the case.
“Kardashian has fully cooperated with the SEC from the beginning and she remains willing to do whatever she can to assist the SEC in this matter. She wanted to put this matter behind her to avoid a protracted dispute. The settlement that she reached with the SEC allows her to do so so that she can move forward with her various business activities,” the statement said.
Kardashian has already felt regulatory heat for her EthereumMax promotion, which she posted on Instagram in June of last year. She started the post by asking her approximately 250 million Instagram followers, “ARE YOU INTO CRYPTO??? THIS IS NOT FINANCIAL ADVICE BUT A BUSINESS MY FRIENDS ARE ONLY TELLING ME ABOUT THE ETHEREUM MAX TOKEN.”
Investors sued him, former NBA star Paul Pierce and superstar boxer Floyd Mayweather Jr. earlier this year for their promotions for EthereumMax, accusing them of artificially inflating the value of the asset.
The SEC on Monday said Kardashian failed to report that she was paid $250,000 by EthereumMax, through an intermediary, to publish a post about EMAX tokens, a crypto asset offered by EthereumMax. The post, which contained the hashtag “#ad”, included a link to EthereumMax’s website, which gives users instructions on how to buy the tokens, the regulator added.
Its failure to disclose the payment was a violation of federal securities laws, the SEC said. She agreed to pay $260,000, which includes the payment she received, plus interest, in addition to the $1 million penalty, the agency added.
“Congress passed a law many decades ago called the Securities Act, and it was to protect the public,” Gensler told CNBC’s “Squawk Box” Monday morning. “Part of that law said that if you advertise a stock, you have to disclose whether you’re being paid.”
Read the SEC settlement order here.
— CNBC’s Jack Stebbins contributed to this report.
