Kim Kardashian banned from peddling crypto and fined US$1.26 million as the SEC cracks down on influencer scams
There has been no shortage of celebrities shilling various obscure token projects to the millions of their followers in the heydays of crypto last year, but the US Securities and Exchange Commission regulator chose to make an example of none other than Kim Kardashian. In 2021, the world's most visible "influencer" personality shared promo stories about one EthereumMax project (in no way affiliated with the creators of the world's second most popular cryptocurrency), urging them to get in on the game.
While it was a typical "token burn" post suggesting that the EthereumMax-backed EMAX token price will rise on limiting its supply, and clearly marked as an ad, the SEC fined her for "touting on social media a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion."
Apparently, Kim Kardashian was given US$250,000 for a single EMAX-touting post without disclosing it, violating a number of SEC rules. According to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement:
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. Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.
While Kim Kardashian's lawyers neither admitted nor denied guilt, they agreed to pay a US$1 million fine in addition to the US$250,000 she received for the EthereumMax post, plus interest, totaling US$1.26 in a plea agreement. However, Kim's investigation is still ongoing and she is currently under a 3-year crypto advertising ban, too.
The Kardashian is not the only high-profile influencer peddling borderline crypto scams, though, and Matt Damon may very well be the next celebrity in the new SEC head Gary Gensler's crosshairs.
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.— Gary Gensler (@GaryGensler) October 3, 2022
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.