According to a press release from the Securities and Exchange Commission (SEC), influencer and socialite Kim Kardashian was charged with allegedly promoting a “crypto security”, called EthereumMax. The celebrity has agreed to cooperate with the regulator’s investigation.
This is not the first time that Kim Kardashian has had to enter or settled a legal action against her. In the crypto space, the EthereumMax promotion has been chasing her across 2022 and might set the ground for other actions against other celebrities.
Kim Kardashian Out Of Crypto Promotion For Years
In late 2021, Kim Kardashian used her Instagram account to promote a project called EthereumMax and its native token EMAX. The socialite was transparent with her followers and disclosed that the post was an advertisement, but this failed to deter the SEC from pressing charges.
According to the release, Kim Kardashian failed to disclose the payment she received for her Instagram post promoting EthereumMax. The post invited her followers to visit the crypto project’s website and provided them with instructions to buy EMAX. Kardashian has over 300 million followers on the platform.
Therefore, her endorsement was sure to cause an impact on the price of the cryptocurrency, classified as a “crypto security” by the regulator. Kardashian was paid $250,000 for promoting the project.
The celebrity will settle with the SEC, she has agreed to pay $1.26 million in penalties, including her promotional payment for EthereumMax. In addition, the socialite agreed to stop promoting “crypto securities” for the coming three years and to cooperate with the SEC’s ongoing investigation.
The regulator claims that Kardashian breached the anti-touting provision of the federal securities laws and is using her high profile and fame to set an example. Via its official Twitter handle, the SEC’s Chairman Gary Gensler stated the following:
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. We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.
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.
— Gary Gensler (@GaryGensler) October 3, 2022
What Is A Crypto Security? SEC Pushes Its Narrative
Further commentaries from the SEC’s Director of the SEC’s Division of Enforcement Gurbir Grewal claim that U.S. securities laws are “clear” on crypto securities endorsement. In that sense, he stated:
The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion.
However, the term “crypto security” has only been recently introduced by the SEC. The regulator is currently trying to obtain more power to oversight the entire crypto industry and has implemented this term as part of its narrative: that all crypto is a security with the exception of Bitcoin, as the SEC Chair has hinted.
As Bitcoinist reported two months ago, Kim Kardashian is facing a class action lawsuit in the U.S. for her alleged involvement in a “Pump-and-Dump” scheme. Her lawyers have attempted to dismiss the charges against her, but with no success so far.