Kardashian failed to disclose she was paid thousands of dollars to promote Emax tokens, violating the anti-touting provision of the federal securities laws.
Kardashian received $250,000 for promoting a crypto asset security by EthereumMax on her Instagram account. Her post contained a link to the EthereumMax website, providing instructions for potential investors to purchase Emax tokens.
The Securities and Exchange Commission (SEC) charged Kardashian for touting the crypto asset on social media unlawfully, and she agreed to pay $1.26 million, including approximately $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest, and a $1,000,000 penalty.
She also agreed not to promote any crypto asset securities for three years.
"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," said SEC Chair Gary Gensler.
According to federal securities laws, any celebrity or other individual promoting a crypto asset security must disclose the nature, source, and 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," Gurbir S. Grewal, Director of the SEC's Division of Enforcement.
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