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Kim Kardashian Settles With SEC Over Crypto Promotion


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The SEC said Kardashian did not disclose that she had been paid to post an article on her Instagram account about EMAX tokens, a crypto asset security offered by EthereumMax.

Kim Kardashian attends the Metropolitan Museum of Art’s Costume Institute Benefit Gala on Monday, May 2, 2022, in New York City. Evan Agostini/Invision/AP, Dossier

Kim Kardashian has agreed to pay $1.26 million to settle Securities and Exchange Commission charges for promoting a cryptocurrency on Instagram without revealing that she was paid $250,000 to do so.

The SEC said Monday that the reality TV star and entrepreneur has agreed to cooperate with its ongoing investigation.

The SEC said Kardashian did not disclose that she had been paid to post an article on her Instagram account about EMAX tokens, a crypto asset security offered by EthereumMax.

Kardashian’s Instagram post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.

“Federal securities laws clearly state that any celebrity or other person who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,” Gurbir Grewal, director of the SEC’s enforcement division, said in a prepared statement.

Kardashian has agreed not to promote any crypto asset securities for three years.

“Ms. Kardashian is pleased to have resolved this matter with the SEC. Kardashian has cooperated fully with the SEC from the outset and she remains willing to do whatever she can to assist the SEC in this matter. She wanted to put this case behind her to avoid a protracted argument. The agreement she reached with the SEC allows her to do that so she can move forward with her many different business endeavors,” a Kardashian attorney said in an email.

While Kardashian is well known for reality TV, currently appearing on “The Kardashians” on Hulu, she is also a successful businesswoman. Its brands include SKIMS, which makes shapewear, loungewear and other products, and a skincare line called SKKN.

For anyone trying to promote a product, Kardashian provides a huge bullhorn with 330 million Instagram followers.

The crypto industry often uses influencers and celebrities to promote new tokens or products. Matt Damon appears in advertisements for Crypto.com, and other celebrities who have been paid to do crypto promotions include Reese Witherspoon and Gwyneth Paltrow.

Kardashian isn’t the first celebrity to catch the eye of financial regulators, either. In 2018, the SEC settled charges against professional boxer Floyd Mayweather Jr. and music producer DJ Khaled for failing to disclose payments they received for promoting digital currency investments.

“This case reminds us that when celebrities or influencers endorse investment opportunities, including crypto asset securities, it does not mean that those investment products are suitable for all investors,” the chairman said. of the SEC, Gary Gensler. “We encourage investors to consider the potential risks and opportunities of an investment in light of their own financial objectives.”

“Ms. Kardashian’s case also reminds celebrities and others that they are required by law to disclose to the public when and how much they are paid to promote investing in securities,” Gensler added.

Cryptocurrency has also attracted increasing attention from Congress. A bipartisan proposal that emerged last month would hand over regulatory authority over Bitcoin and Ether, two popular cryptocurrencies, to the Commodities Futures Trading Commission after wild swings in crypto valuations, dozens of scams and hundreds billions of dollars won and lost.

Cryptocurrencies, after soaring during the pandemic, have had a tough year as prices swing wildly, but mostly down, and with crypto companies coming under increasing scrutiny.

The token that Kardashian was promoting has performed particularly poorly and is now worse at less than 10% of its peak price.

Bitcoin has lost more than half its value in 2022, falling from nearly $46,000 to around $19,000 on Monday.



Boston

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