Celebrity Kim Kardashian has settled to pay approximately $1.3 million to the Security Exchange Commission(SEC) after allegations that she touted a cryptocurrency token on social media without disclosing that she was paid for this promotion. This is against The United States laws regarding the advertising of cryptocurrencies.
Earlier this week, the SEC said in a statement that Kim K was paid a quarter of a million dollars for advertising a crypto token on her Instagram account which has 331 million followers. The advertisement was for EMAX tokens, which is a digital asset that is offered by the company EtherumMax.
Settlement Contingencies
As a part of the settlement agreement, Kim did not admit or deny the allegations that were handed to her via the SEC. Another part of the settlement agreement restricts Kim from touting crypto assets for at least three years.
Despite including “#AD” at the bottom of the post she made in 2021, the SEC still determined that investors were completely unaware that Kim Kardashian was receiving financial compensation for promoting the digital currency.
SEC Previous Warnings
Kim Kardashian is not the first celebrity that The Securities and Exchange Commission has dished some hefty fines. They constantly warn celebrities that they need to make it clear to the investors that they are being paid for the backing of the cryptocurrency they are touting. Four years ago, the SEC fined legendary boxer, Floyd Money Mayweather, for failing to disclose to investors the payments he received for hyping up the cryptocurrencies’ initial offerings. Music Producer DJ Khaled was also given a fine for the same thing that Mayweather did.
Wrap-Up
The financial regulator of England also called out the advertisement made by Kardashian. Charles Randell, who at the time was the Chairman of the U.K.’s Financial Conduct Authority said that the post made by Kim K “may have been the financial promotion with the single biggest audience reach in history.”
As crypto becomes more mainstream and more celebrities are beginning to advertise certain digital coins, the SEC will likely continue to crack down even more than they have previously.
If your favorite celebrity is advertising a digital asset and praising how great it is, it is always important to take into account that these celebrities are most likely being compensated for hyping up the digital asset.