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Kim Kardashian agreed to pay a $1.26 million fine to the Securities and Exchange Commission to settle civil lawsuits after the reality TV star touted a crypto asset, EthereumMax, on Instagram.
The SEC accused Kardashian of failing to disclose that she was paid $250,000 to publish her Instagram post. In addition to paying the fine, she agreed to cooperate with the ongoing SEC investigation.
“This case is a reminder that celebrity or influencer endorsement of investment opportunities, including crypto-asset securities, does not mean those investment products are appropriate for all investors,” said SEC Chairman Gary Gensler. “We encourage investors to weigh the potential risks and rewards of an investment against the backdrop of their own financial goals.”
Kardashian also agreed not to endorse cryptocurrency securities for three years.
“MS. Kardashian is pleased to have resolved this matter with the SEC,” her attorneys said in a statement. “Kardashian has cooperated fully with the SEC from the outset and remains committed to doing everything in her power to resolve to assist the SEC in this matter. She wanted to get this matter over with to avoid a protracted dispute. The agreement she has reached with the SEC allows her to do so so that she can further her many different business activities .”
The SEC determined that Kardashian violated the anti-touting provision of the federal securities laws. Kardashian approved the order without admitting or denying the SEC’s findings.
The settlement includes a $1 million fine and forfeiture of the $250,000 payment she received, plus interest.
Gensler tweeted that “celebrity or influencer incentives don’t necessarily match yours.” He said the investing public shouldn’t confuse the skills of celebrities “with the very different skills required to provide proper investment advice.”
The SEC may have targeted Kardashian to send a message to other influencers who may be promoting cryptocurrencies or other assets, said Charles Whitehead, a professor at Cornell Law School. He called it a “shot across the bow” for prominent crypto endorsers.
“It’s a way of signaling to other influencers: If you’re thinking about getting into crypto, think twice,” Whitehead said. “The SEC also uses her as an influencer — but to promote compliance with securities laws. [It’s a] clever way of drawing attention to the matter so others don’t.”
Kardashian isn’t the first celebrity to pay an SEC fine for using her influence to promote cryptocurrencies. In 2018, boxer Floyd Mayweather Jr. and music producer DJ Khaled each paid fines for moving cryptos. Mayweather, who received $300,000 in compensation, paid just over $600,000 in penalties, while Khaled, who received $50,000, was fined over $150,000. Additionally, actor Steven Segal paid more than $300,000 in penalties in 2020 for doing the same thing.
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In a June 13, 2021 Instagram post, Kardashian wrote, “Are you into crypto? This is not financial advice but sharing what my friends told me about the Ethereum Max token!” She added various hashtags including #ad, #emax and #disrupthistory among others.
The SEC said she had 225 million Instagram followers at the time of the post.
The #ad is insufficient to comply with SEC laws regarding investment touting, Gensler said in an interview on CNBC on Monday.
“If you advertise perfume, holiday homes or anything else on the Internet, there are various laws that go with it. But that’s the securities laws,” he said.
Kardashian’s net worth is estimated at $1.8 billion, according to Forbes. So a $1.26 million fine equates to a fine of less than $100 for a typical U.S. family, which has a net worth of about $122,000 according to the latest Federal Reserve estimates.