It has been reported that Kim Kardashian will pay $1.26 million to settle Securities and Exchange Commission (SEC) allegations that she broke US rules by touting (attempting to sell) a crypto token without disclosing she was paid for the promotion.
According to the SEC, Kardashian was paid $250,000 to post on her Instagram account about EMAX tokens, a crypto asset offered by EthereumMax. Khardashian didn’t admit or deny the regulator’s allegations in settling the case.
The settlement raises issues for other crypto endorsements. Crypto companies spent millions last year on ads during the Super Bowl, many of them featuring celebrities, including Matt Damon and Tom Brady. Could those ads lead to S.E.C. investigations? The S.E.C. declined to comment on whether it was pursuing cases against other celebrities.
This has followed after the SEC has frequently warned that celebrities touting cryptocurrencies that it deems securities need to make clear to investors if they’re paid for the backing. In 2018, the regulator fined Boxer Floyd Mayweather and music producer DJ Khaled for failing to disclose payments they received for hyping initial coin offerings.
“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,” SEC Chair Gary Gensler said in a statement on Monday. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
The reality television star settled the case to avoid a protracted dispute and “so that she can move forward with her many different business pursuits,” said Patrick Gibbs, a partner at the law firm Cooley who is representing Kardashian. She “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,” he added.
