Kim Kardashian Pays $1.3 Million To Settles SEC Charges Over Crypto Post

The reality star and celebrity influencer Kim Kardashian is in hot water with the SEC over promoting a cryptocurrency on her social media account. According to the SEC, she received a quarter of a million dollars for posting about the cryptocurrency but failed to disclose this information in the online advertisement. As of now, she has agreed to not promote digital assets for the next three years. When news of the charges broke out, her legal team informed news outlets that she settled the issue with the securities agency.

Celebrities Should Disclose Endorsement Deals For Investment Products, Says SEC

While celebrity endorsements can prove beneficial in the tech industry to promote smartphones and appliances, it’s not ideal for digital assets. SEC chairperson Gary Gensler explained that the case serves as a reminder about the validity of celebrity endorsements. This is especially the case for cryptocurrencies, which require the audience to invest in it.

Moreover, it reflects back on the importance of celebrities disclosing their endorsement deals. Aside from informing the audience that they received payment for endorsing an investment asset, celebrities should disclose how much they are paid to do so.

In a PSA about cryptocurrency investments on YouTube, he elaborated on the dangers of following celebrity endorsements too carefully. In fact, he stated that endorsements don’t make an investment product legitimate, as many cryptocurrencies are highly speculative.

Kim Kardashian Pays $1.3 Million in Penalties

After being faced with the charges early this year, Kim Kardashian agreed to settle and pay $1.3 million in fines and penalties. She neither denied nor admitted to the charges made against her. In their statement, the SEC elaborated that the influencer published a post about EMAX tokens on her Instagram account. The post directed users to the EthereumMax website, which had detailed instructions on how investors can purchase EMAX tokens.

Gensler acknowledged and appreciated Kardashian’s cooperation. However, he explained that promoting investment securities as a high-profile influencer can have lasting consequences.

EthereumMax Labeled as Pump and Dump Scheme

At the beginning of the year, Kardashian was sued due to allegations that she misled investors by promoting a cryptocurrency that people still had little knowledge about. Last year, EthereumMax lost a significant chunk of its value, which prompted analysts to call it a pump and dump scheme. It’s likely that the company increased the price of the token through false statements.

Kardashian’s post did clarify that she wasn’t giving financial advice, but may have caused much confusion among the audience. Despite the name, EthereumMax has nothing to do with Ethereum, which is the second-biggest cryptocurrency after Bitcoin. Branding the new token as EthereumMax could have been an attempt to mislead uninformed investors by making them think that it’s a member of the Ethereum network.