Reality television star and social media influencer Kim Kardashian has been fined a whopping $1.26 million for promoting a crypto asset EthereumMax. The Securities and Exchange Commission (SEC) fined her for failing to disclose that she was paid $250,000 to publish her Instagram post.
Gary Gensler, the SEC chair, highlighted this case as a reminder that celebrities or influencers endorsing investment opportunities, including crypto-asset securities, don’t make investment products right or safe for all investors. The agency urges investors to consider an investment’s potential risks and opportunities in light of their own financial goals.
The Securities and Exchange Commission found that Kardashian had violated the anti-touting provision of federal securities laws.
The socialite’s attorneys in an official statement said Kim Kardashian has resolved this matter with the SEC. They said that Kardashian fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the Securities and Exchange Commission in this matter. She wanted to put the matter behind her to avoid a protracted dispute.
The SEC chair tweeted that any celebrity or influencer’s incentives are not necessarily aligned with the traders. He advised the investing public not to confuse the skills of celebrities with the very different skills needed to offer appropriate investment advice.
Charles Whitehead, a professor at Cornell Law School, believes the SEC may have targeted Kim Kardashian as a way to send a message to other influencers who might be promoting cryptocurrencies or other investment assets. He described it as a “shot across the bow” for celebrity crypto endorsers.
The SEC fined boxer Floyd Mayweather and music producer DJ Khaled in 2018 for promoting cryptocurrencies. Steven Segal also saw a similar fate in 2020.