Kim Kardashian will pay $1.26 million to settle SEC charges stemming from a cryptocurrency ad she posted on Instagram Stories.
According to the agency, the socialite and reality TV megastar was paid $250,000 to promote EthereumMax’s EMAX tokens but did not disclose the payment.
MORE FROM RAVZGADGET: What To Expect From Google’s Pixel 7 Event On October 7th
Kardashian was found to have violated the anti-touting provision of federal securities laws by the SEC.
She did not admit or deny the charges, but she agreed to pay a $1 million penalty and approximately $260,000 in disgorgement, which the SEC said covers the ad fee plus prejudgment interest. Kardashian also promised not to promote cryptocurrency assets for the next 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,” SEC chair Gary Gensler said.
“We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
A class-action lawsuit was filed against Kardashian and Floyd Mayweather earlier this year for promoting EthereumMax tokens. It accused the defendants of engaging in a pump and dump scheme, in which investors promote an asset and then sell their stake when its value rises.
According to the lawsuit, the token’s value increased by 632 percent after Mayweather and former NBA player Paul Pierce (another defendant in the case) promoted it.
According to a survey, 19% of people who saw Kardashian’s Instagram Story mentioning the cryptocurrency invested in EthereumMax. According to the lawsuit, the value of the token dropped by 98 percent the day after Kardashian’s post.
This is not the first time Kardashian has been accused of publishing sponsored posts without disclosing the fact that they are advertisements.
MORE FROM RAVZGADGET: Yahoo Mail App Update Makes It Easier To Manage Receipts And Track Deliveries
According to FTC guidelines, those who are paid to endorse something on social media should use the #Ad hashtag or terms like “Sponsored,” “Promotion,” or “Paid ad.”
A new podcast narrated by Kardashian, who is studying to be a lawyer, debuted on Spotify on Monday in an incredible case of serendipity. The System: Kevin Keith’s Case is a true-crime podcast.