Kim Kardashian agreed to pay $1.26 million to settle charges brought by the Securities and Exchange Commission, which alleged she unlawfully promoted a cryptocurrency over Instagram in June of last year.
The SEC said the reality TV superstar and celebrity influencer endorsed EthereumMax's crypto token for $250,000 last year without disclosing the payment she received for the promotion, violating the anti-touting provision of the federal securities law.
The settlement includes $260,000 in disgorgement and interest and $1 million in penalties. Additionally, Kardashian agreed to to not promote any crypto asset securities for three years and will cooperate with the U.S. regulator’s ongoing investigation.
“This is not financial advice but sharing what my friends just told me about the ethereum max token,” Kardashian's now infamous June 2021 post which included “#AD" stated.
She agreed to the settlement without admitting to or denying SEC’s findings.
"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 in a statement released by the agency on the matter.
Last year during crypto’s bull run, numerous celebrities increased the hype around digital assets by endorsing various crypto tokens on their social media platforms — which can have major reach.
For instance, Kardashian's Instagram account is ranked as the platform's 9th most influential account worldwide, according to Hypeauditor.com. Her clothing business SKIMS — estimated to be worth of $3.2 billion — is also the second-highest valued celebrity-owned business, according to a recent report by London-headquartered Investing app, Invezz.
"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 said in the statement.
Since the crypto market's peak in November of last year, the total market capitalization for the asset class has hurtled 67% lower from $2.8 trillion to $928 billion, according to Coinmarketcap.
A recent poll conducted by Bankrate found that U.S. investor comfort in cryptocurrencies has plummeted since last year, particularly among millennial and generation Z investors who use social media as a primary investing source.
Between 2021 and September 2022, comfort with cryptocurrencies fell by 41% for millennials. As of last month, only half of respondents who claim to use social media as a primary investing source believe the information is trustworthy.
"We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals." Gensler added in the release.
Updated with additional comments from Kardashian's EthereumMax post.
David Hollerith is a senior reporter at Yahoo Finance covering the cryptocurrency and stock markets. Follow him on Twitter at @DsHollers
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