Kim Kardashian will pay $1.26 million to settle Securities and Exchange Commission allegations that she broke US rules by touting a crypto token without disclosing she was paid for the promotion.
The SEC said Kardashian was paid $250,000 to post on her Instagram account about EMAX tokens, a crypto asset offered by EthereumMax. Kardashian didn’t admit or deny the regulator’s allegations in settling the case.
The SEC has frequently warned that celebrities touting cryptocurrencies that it deems securities need to make clear to investors if they’re paid for the backing. In 2018, the regulator fined Boxer Floyd Mayweather and music producer DJ Khaled for failing to disclose payments they received for hyping initial coin offerings.
“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 in a statement on Monday. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
Wall Street’s main regulator has long asserted that many virtual tokens are securities and under its jurisdiction. To determine whether something is a security, the SEC applies a legal test, which comes from a 1946 Supreme Court decision. Under that framework, an asset can be under SEC purview when it involves investors kicking in money with the intention of profiting from the efforts of the organization’s leadership.
By Lydia Beyoud with assistance from Emily Nicolle.
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