According to the Securities and Exchange Commission, Kim Kardashian has found herself in legal trouble for failing to properly disclose that she promoted cryptocurrency as part of a paid ad in an Instagram Story. The IG Story at the center of the investigation was uploaded in June 2021. “Are you guys into crypto? This is not financial advice but sharing what my friends told me about the ethereum max token!” Kim reportedly wrote on Instagram at the time, per CNN.
Notably, Kim reportedly added the hashtag #ad. Although this would have been enough to pass for regular sponsored posts, the rules are stricter when promoting cryptocurrency. In an Oct. 3 press release issued by the SEC, Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said that anybody who promotes cryptocurrency “must disclose the nature, source, and amount of compensation they received in exchange for the promotion.”
Grewal added that “investors are entitled to know whether the publicity of a security is unbiased.” Because Kim didn’t disclose that she was paid $250,000 for her post about EMAX tokens — a crypto asset offered by EthereumMax — she was ordered to pay the sum back, alongside prejudgment interest and a $1 million penalty.
The SEC said Kim did not admit or deny their findings but agreed to pay the $1.26 million fine and not promote crypto asset securities for three years.
SEC Chair Gary Gensler announced Kim’s charges on Twitter on Oct. 3. “Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security,” Gensler wrote. “This case is a reminder that, when celebrities/ influencers endorse investment [opportunities], including crypto asset securities, it doesn’t mean those investment products are right for all investors.”
Gensler explained this further in an informational video attached to his tweet. “We might enjoy watching a celebrity playing on a basketball court, starring in a reality TV show or a movie, or performing to a large crowd at a stadium show,” he said in the video. “We shouldn’t confuse those skills though with the very different skills needed to offer appropriate investment advice.”
According to CNN, Kim is “pleased to have resolved this matter with the SEC.”
“[Kim] 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,” Kim’s attorneys said in a statement to CNN. “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.”