Kim Kardashian on Monday agreed to pay a $1.26 million fine to settle charges brought against her by the U.S. Securities and Exchange Commission for promoting the cryptocurrency EthereumMax without disclosing the fact that she was being paid for the promotion.
In a press release, the SEC said its investigation found Kardashian had received $250,000 to promote the cryptocurrency on her Instagram account, a fact she failed to disclose.
As part of the settlement, Kardashian will pay $260,000 in disgorgement—repayment of her promotional fee plus accumulated interest—and a $1 million fine.
Aside from the financial penalty, Kardashian has agreed not to promote any crypto assets for three years.
The press release notes that Kardashian has neither admitted to nor denied the findings of the SEC’s investigation.
In a statement shared with Forbes, Kardashian’s team said she fully cooperated with the SEC and is “pleased to have resolved this matter” adding that she “wanted to get this matter behind her to avoid a protracted dispute.”
“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,” SEC Chair Gary Gensler said.
As the cryptocurrency market has cratered since the start of this year, celebrities who previously promoted them have come under criticism. Despite their growing popularity, crypto tokens remain highly volatile and unregulated assets and critics argue that celebrity endorsements expose them to people who may be unaware of their risks. In June, the SEC itself put out a public service advertisement warning of the risks tied to celebrity-endorsed crypto assets. Kardashian in particular is among the celebrities—including boxer Floyd Mayweather Jr. and former NBA star Paul Pierce—who have been criticized for boosting EthereumMax, whose current value is less than a fraction of a cent. Kardashian, Mayweather and Pierce were sued in January in a class action suit that alleged they were involved in a pump-and-dump scheme.
Kim Kardashian, Floyd Mayweather Jr., Others Sued Over Cryptocurrency Promotion (Wall Street Journal)