Kim Kardashian Faces SEC Charges, Illegally Promoted Crypto Securities
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According to the SEC's order, Kim Kardashian did not disclose that she received $250,000 from EthereumMax to write a post regarding EMAX tokens on her Instagram account. Kardashian's post included a URL to the EthereumMax website, where prospective investors could find instructions on how to buy EMAX coins.
Charges Serve as Warning
SEC Chairman, Gary Gensler, noted that this case serves as a warning that just because a celebrity or other influential person promotes a particular investment opportunity, such as securities backed by cryptocurrencies, does not indicate that all investors should use that opportunity. He further stated,
"We encourage investors to consider an investment's potential risks and opportunities in light of their own financial goals."
Important to Disclose Exchange
Gurbir S. Grewal, Director of the SEC's Division of Enforcement, emphasized that any celebrity or other individual who promotes a cryptocurrency asset security must report the type, source, and amount of money they received in exchange for the promotion under federal securities laws. Investors have a right to information about how objective a security's advertising is, and Ms. Kardashian failed to provide it.
Kardashian Violated Anti-Touting Rule
According to the SEC's ruling, Kim Kardashian breached the anti-touting clause of the federal securities legislation. Kim agreed to settle the mentioned $1.26 million, which included about $260,000 in disgorgement, which reflects her promotional money, and prejudgment interest, along with a $1,000,000 penalty, without acknowledging or disputing the SEC's allegations. She also consented to refrain from endorsing any assets backed by cryptocurrency for three years.