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Kim Kardashian has agreed to pay the fine to resolve SEC claims that she promoted a cryptocurrency on Instagram without revealing that she had been paid to do so.
Since its high in May of last year, the Ethereum Max token that Kardashian championed has lost more than 90% of its value.
The SEC charged Kardashian with failing to disclose that she got $250,000 in exchange for publishing her Instagram post. She consented to cooperate with the SEC's continuing investigation in addition to paying the penalties.
Kim Kardashian Fined For Cryptocurrency Promotion
Kim Kardashian also consented to refrain from endorsing any cryptocurrency securities for three years, as per CNN. The billionaire and reality TV star has consented to help the SEC's ongoing inquiry, the agency said on Monday. Kim Kardashian, 41, did not acknowledge or refute the SEC's allegations in her settlement.
The Securities and Exchange Commission (SEC) claimed that Kardashian did not disclose that she received payment to post on her Instagram account promoting EMAX tokens, a cryptocurrency asset security provided by EthereumMax. Kim Kardashian's post had a link to the EthereumMax website, which provided information on how to purchase EMAX tokens for potential investors.
Any famous person or another person who promotes cryptocurrency security must report the type, source, and amount of remuneration they received, according to federal securities laws. The promotion, said Gurbir Grewal, director of the SEC's division of enforcement, in a prepared statement.
Disgorgement of $260,000, prejudgment interest, and a $1 million fine are all included in Kardashian's $1.26 million settlement, USA Today reported. In a similar deal with the SEC in 2020, actor Steven Seagal agreed to pay more than $300,000 and was also barred from recommending investments for three years.
Boxer Floyd Mayweather Jr. and music producer DJ Khaled were the subjects of a 2018 SEC settlement after they were accused of failing to report money they received for encouraging investments in virtual currencies.
According to Gary Gensler, chairman of the Securities and Exchange Commission, the Kardashian settlement serves as a reminder to celebrities and others that the law demands them to disclose to the public when and how much they are paid to urge investment in securities.
Why Kim Kardashian Crypto Case Matters?
A lawyer for Kardashian, Patrick Gibbs, claims that Kardashian has fully cooperated with the SEC from the very beginning and she continues to be willing to do all she can to assist the SEC in this case, according to ABC.
As stated in 2021 CreditCards.com survey, social media is millennials and Gen Z's second-most preferred source of financial guidance behind friends and family. The survey found that 52% of those who receive financial advice from social media consider it to be trustworthy.
Chen Arad, the COO of Solidus Labs, a crypto-native risk monitoring and market surveillance company, laments the fact that so few people properly comprehend crypto and its benefits and risk. When making investing decisions, make sure to conduct in-depth research on the item you're thinking about. Working with a licensed financial planner or other counsel instead of following advice from social media may also make sense.
Cryptocurrency prices rose dramatically during the outbreak, but they have since plummeted along with the general market collapse. From a value of over $88,000 in November 2021 to a current level of about $30,000, bitcoin has lost more than half of its value in 2022.
Since its high in May of last year, the Ethereum Max token that Kardashian championed has lost more than 90% of its value, as per CNBC via MSN.
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