Kim Kardashian just paid out a huge settlement with the U.S. Securities and Exchange Commission (SEC) for unlawfully promoting a cryptocurrency asset on social media. Kardashian made a post on Instagram about EthereumMax "tokens," providing a huge publicity opportunity for the company. According to a report by CNBC, she failed to report how much she was paid for this promotion, drawing the SEC's scrutiny.
Kardashian reportedly paid $1.26 million to the SEC to settle the matter of her EthereumMax promotion. She has also agreed to cooperate with the commission's ongoing investigation into this case and has agreed not to promote and cryptocurrency assets for at least three years. SEC chairman Gary Gensler said: "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."
Welcome to influencers in 2021:— Coffeezilla (@coffeebreak_YT) June 14, 2021
Kim Kardashian is promoting EthMax, an outright scam token that has 0 connection to ethereum. Instead, it’s a sketchy website with no whitepaper, a falling market cap, and is on the cusp of going bust. pic.twitter.com/84qb95ldr9
Although she paid the settlement and agreed to other terms, Kardashian's attorney told CNBC that she did not formally admit to any wrongdoing, nor did she deny any. The lawyer's statement said that Kardashian is simply pleased to have this matter settled for now.
"Kardashian fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the SEC in this matter," they said. "She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits."
The offending post in June of 2021 read: "ARE YOU INTO CRYPTO??? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN." According to the SEC, Kardashian received $250,000 in exchange for this social media promotion, which she failed to disclose. She added the hashtag "ad" to the post, but that wasn't enough to meet the commission's standards.
Gensler said that the purpose of these kinds of investigations is to protect the public from misleading financial advice and maintain public transparency. He said: "Congress passed a law many decades ago called the Securities Act, and it was to protect the public. Part of that law said that if you tout a stock you have to disclose if you're getting paid."
Kardashian's personal net worth is still estimated at about $1.8 billion, which is not significantly impacted by this penalty. The reality star continues to profit from social media promotions and brand partnerships.