American Celebrity Kim Kardashian has agreed to pay $1.26 million to the U.S. Securities and Exchange Commission (SEC) in settlement of claims that she promoted the sale of unregistered securities token EMAX.
According to the SEC, Kardashian was paid $250,000 by EthereumMAX to promote the EMAX token to her Instagram followers (now over 330 million).
As per securities law, any celebrity who promotes a crypto asset must disclose how much they received for the promotion.
“Investors are entitled to know whether the publicity of security is unbiased, and Ms. Kardashian failed to disclose this information.” said SEC Director Gurbir Grewal
Consequently, the SEC has asked Kardashian to pay back $260,000 received for her promotion and an additional $1 million for violating securities laws.
Kardashian has agreed to pay up the $1.26 million and will refrain from promoting any crypto securities token over the next three years.
SEC chairman Gary Gensler advised investors not to make their investment decisions based solely on promotions by influencers.
“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.”
“Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”
The SEC has an ongoing case against another influencer Ian Balina, who allegedly promoted unregistered SPRK securities tokens to his social media followers in 2018.