Kim Kardashian, a reality TV star and businesswoman, reportedly agreed to pay the Securities and Exchange Commission $1.26 million as part of a settlement after the public figure was charged with endorsing a cryptocurrency asset security without disclosing the compensation she received for the promotion. In addition, Kardashian must pay back the $250,000 she received with interest for publishing about EthereumMax tokens.
Without acknowledging or denying the SEC’s findings, Kardashian agreed to pay the penalties. Her attorney told the BBC that, “she wanted to get this matter behind her to avoid a protracted dispute.”
According to a report by Variety, “Kardashian fully cooperated with the SEC from the very beginning, and she remains willing to do whatever she can to assist the SEC in this matter. She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.”
Which Asset Did Kim Kardashian promote?
In June last year, Kim shared a post on Instagram and had written, “Are you guys into crypto???” and had provided a link to the EthereumMax website where investors could get information on how to buy EMAX coins. “Sharing what my friends just told me about the EthereumMax token!”, the post said, and it added the hashtag “#ad” to indicate that it was a paid advertisement.
Kim has 331 million followers as of October 4 and the star had 220 million followers when the crypto post was published in June of last year. Kardashian’s net worth, which is estimated to be $1.8 billion, will not be significantly affected. However, the SEC deal may short-term deteriorate relations with her brand partners.
The fact that the star received $250,000 through an intermediary for the post was something she chose not to disclose to her 220 million Instagram followers at the time.
The pump and dump scheme has its consequences
A Los Angeles federal court has also filed a lawsuit against Kardashian, boxing champion Floyd Mayweather, Jr. basketball player Paul Pierce, and EthereumMax for their roles in the promotion of the cryptocurrency tokens. According to the lawsuit, celebrity endorsements increased the currency’s value to over 1,300% more than its initial cost until it dropped to “an all-time low” around a month after Kardashian’s post. A New York individual who lost money after purchasing EMAX tokens filed the lawsuit in January.
The SEC Chair Gary Gensler said, “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.”
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