It seems the U.S. Securities and Exchange Commission (SEC) is no longer taking any chances with ‘crypto and other sensitive forms of financial influencing’ after the GameStop Saga poked some holes in online investment marketing.
Now, per reports by CNBC, the federal agency is charging Kim Kardashian for “unlawfully touting” a “crypto security.”
According to the SEC, Kim was in violation of the federal Securities Act when she “promoted a crypto asset security provided and sold by EthereumMax” without the “necessary disclosure” that she received a $250,000 payment to publish a post touting the crypto asset on her IG account.
“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it doesn’t mean that those investment products are right for all investors,” Gary Gensler, chairman of the SEC, said in a statement.
Kim, who is reportedly worth over $1.8 billion, agreed to pay $1.26 million to settle the charges for promoting EthereumMax’s crypto asset on her Instagram feed. $260,000 will be for the payment she received plus interest, while the $1m is the incurred penalty.
“She will also cooperate with an ongoing investigation and has agreed not to promote crypto securities for three years,” the federal agency continued.
Kim Kardashian, who’s built a lifestyle empire, neither admitted nor denied the SEC findings.
However, in a published statement, a lawyer for Kim said that the reality TV star is pleased to have resolved the issue.
“Kardashian fully cooperated with the SEC from the very beginning, and she remains willing to do whatever she can to assist the SEC in this matter. She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits,” the statement read.
This is not the first time Ms. Kardashian has felt regulatory heat over crypto asset promotion. In June last year, Kim posted another EthereumMax advertisement on Instagram, which led to her being sued by investors for artificially inflating the asset’s value.
And although the post featured the #ad, SEC Chair Gary Gensler said that #ad is not sufficient to comply with SEC laws in regards to touting investments.
He also, on Twitter, said that celebrity endorsements should not be construed as financial advice. “Crypto assets fall under existing securities laws, as do other new technologies that mirror traditional securities in form and function.”
“Congress passed a law many decades ago called the Securities Act, and it was to protect the public,” Gensler told CNBC on Monday morning. “Part of that law said that if you tout a stock, you have to disclose if you’re getting paid.”
