The Securities and Exchange Commission is keeping up with Kim Kardashian after she allegedly violated a provision of federal securities laws when she failed to disclose a $250,000 payment received from EthereumMax (EMAX) for touting a crypto asset.
The star published a post on her personal Instagram account featuring a link to the EMAX website and advertising EMAX tokens. The post included the hashtag “ad.” However, Kardashian did not disclose the payment that she received from EMAX in exchange for promoting the asset. The promotion was therefore in violation of the anti-touting provision of federal securities laws, according to the SEC. Kardashian reportedly received the payment via an intermediary.
SEC and Kardashian settlement
Ms. Kardashian is believed to have fully cooperated with federal authorities. She has since settled the matter with the SEC by paying a $1 million fine, plus $260,000 (which includes the payment she received from EMAX) to settle the case with the federal agency. As part of the settlement, she also agreed not to promote crypto securities for three years.
The SEC is reminding influencers and celebrities that endorsing investment opportunities, including crypto asset securities, carries unique risks due to the nature of these assets. To remain in compliance with the law, the SEC recommends carefully evaluating asset-touting opportunities and being cognizant of the audience to whom such ads are directed.
If you have questions or concerns about legal exposure related to cryptocurrency or other matters of securities law, we encourage you to contact the securities law attorneys at Ford O’Brien Landy LLP. With offices in New York City and Austin, Texas, we advise and represent clients nationwide.
Source: SEC Press Release, “SEC charges Kim Kardashian for unlawfully touting crypto currency,” Oct. 3, 2022