The Securities and Exchange Commission is accusing Kim Kardashian of using her Instagram account to promote cryptocurrency without disclosing her compensation.
Kim Kardashian charged by SEC over alleged 'pump and dump' crypto scheme https://t.co/gYpc2WbFEw pic.twitter.com/6rLHFk9Ge4
— New York Post (@nypost) October 3, 2022
SEC officials say Kardashian has agreed to cooperate with the agency’s investigation and pay $1.26 million in fines. According to a tweet Kardashian sent to her tens of millions of followers in June 2021, she received $250,000 from EthereumMax to promote its EMAX tokens. As of right now, the celebrity has 330 million Instagram followers.
In that post, she asked, “ARE you guys into crypto???” and included instructions on how to purchase Ethereum Max’s token. She posted what her friends told her about the token, not financial advice.
CNBC: Kim Kardashian is being charged by the SEC for her promotion of a crypto currency and agrees to pay a $1.26 million fine for failing to disclose that she was paid to promote EMAX tokens on Instagram.
— Tom Winter (@Tom_Winter) October 3, 2022
What Went Wrong?
In addition to marking the post as advertising, Kardashian had to disclose how much she was paid by the SEC.
The settlement also stipulates that Kardashian will refrain from promoting any cryptocurrency tokens for three years. According to Kardashian’s attorney Patrick Gibbs, she is “pleased that the SEC has addressed this issue.”
“Kardashian cooperated fully with the SEC from the beginning, and she continues to support the SEC in this case,” Gibbs said. It was her desire to put this issue behind her rather than have a long argument. The SEC negotiated an arrangement that allows her to continue her many business pursuits, which allows her to continue to operate.
Kardashian was listed as a co-defendant in a class-action lawsuit filed in California earlier this year. In the lawsuit, she was accused of artificially participating in a plot to increase the value of EMAX tokens. Based on CoinMarketCap statistics, the cryptocurrency has fallen by 94% since then, unrelated to Ether, the second-largest cryptocurrency. Her deal with the SEC did not confirm or deny the SEC’s allegations.