Kim Kardashian has been fined for failing to disclose a paid advertisement on social media. The reality star agreed to pay a $1.26 million fine to the Securities and Exchange Commission (SEC) to settle civil charges after she promoted crypto asset EthereumMax on Instagram.
Per the SEC, they are charging the SKIMS founder with failure to disclose that she was paid $250,000 to publish her June 2021 Instagram post. In addition to paying the fine, she agreed to cooperate with the SEC’s ongoing investigation and will not promote any crypto securities for three years.
“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,” said SEC Chair Gary Gensler. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
“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,” Gensler added. The SEC urges caution regarding potentially unlawful celebrity-backed crypto asset offerings. Gensler also published a video warning to Twitter for investors not to make investment decisions based solely on the recommendations of a celebrity or influencer.
Gensler said in the video that “any celebrity or influencer’s incentives aren’t necessarily aligned with yours.” He said the investing public shouldn’t confuse the skills of celebrities “with the very different skills needed to offer appropriate investment advice.”
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.— Gary Gensler (@GaryGensler) October 3, 2022
This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.
“Ms. Kardashian is pleased to have resolved this matter with the SEC,” Kim’s attorneys said in a statement. “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. 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 SEC found that Kardashian violated the anti-touting provision of the federal securities laws. Kardashian agreed to the order without admitting or denying the SEC’s findings. The settlement includes a $1 million fine and forfeit the $250,000 payment she received, plus interest.
Kim’s June 13, 2021 Instagram post read: “This is not financial advice but sharing what my friends told me about the ethereum max token!” She included hashtags #ad, along with #emax and #disrupthistory, among others. The #ad is not sufficient to comply with SEC laws in regards to touting investments, said Gensler in an interview on CNBC. “Congress passed a law many decades ago called the Securities Act, and it was to protect the public,” Gensler said. “Part of that law said that if you tout a stock you have to disclose if you’re getting paid.”