Celebrity Kim Kardashian has been slapped with a $1.26 million charge by the Securities and Exchange Commission for touting a crypto asset security without disclosing the $250,000 pay out she got for the promotion.
The SEC’s order finds that Kardashian failed to disclose that she was paid the substanital cash sum to publish a post on her Instagram account about Emax tokens, the crypto asset security being offered by EthereumMax. Kardashian’s post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase the tokens.
The settlement reached with the SEC by Kardashian includes a $260,000 payment that represents that original amount, plus interest, as well as $1 million in penalties. Kardashian has also agreed to cooperate with an "ongoing investigation" by the Commission.
SEC chair Gary Gensler immediately took to Twitter, warning investors not to make investment decisions based solely on the recommendations of a celebrity or influencer.
The action is likely to lead to further punishments for other celebrities and influencers who have cashed in on the crypto asset craze.
"The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion," says Gurbir S. Grewal, director of the SEC’s Division of Enforcement. "Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information."