Kim Kardashian and the Securities and Exchange Commission (SEC) have reached a settlement agreement.
The popular influencer has agreed to pay around $1.3 million to settle her charges from the SEC over the crypto ad she posted on Instagram Stories, per Engadget.
Kardashian will also cooperate with the SEC in its ongoing investigation of her crypto ad.
Kim Kardashian's $1.3 Million Settlement Details
The SEC mentioned in its announcement that Kim Kardashian had agreed to pay $1.26 million in penalties for posting a cryptocurrency ad on her Instagram Stories without disclosing the payment she received for doing so.
According to the Commission, it found that Kardashian failed to mention that she was paid $250,000 to publish an ad about EMAX tokens, the crypto asset security offered by Ethereum Max.
You may remember that Kardashian posted the ad in question on June 14, 2021, inviting people to join the E-max community when Ethereum Max burned 400 trillion tokens to "give back to the entire E-Max community," per Coin Desk.
The SEC added that the Instagram Story Kardashian made also included a link to the official Ethereum Max website, which, upon opening, provided instructions for interested investors to purchase EMAX tokens.
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The Commission then stated that it found the post to be in violation of the anti-touting provisions of the deferral securities laws, which dictates that any celebrity or other individual promoting a virtual token or coin that is a security must disclose the nature, scope, and how much they were paid to create and post the promotion, per its Nov. 2017 statement.
Furthermore, any person making such advertisements is putting themselves at risk of violating the federal securities laws' anti-fraud provisions. They will also be liable for participating in an unregistered offer and sale of securities and acting as unregistered brokers for the cryptocurrencies they are advertising.
In addition to paying the $1.26 penalty to the SEC, Kardashian also agreed that she would forfeit the $250,000 she received from Ethereum Max for promoting their EMAX token, including interests, per a CNN report.
Kardashian is also prohibited by law from promoting any crypto asset securities for three years.
A Warning Shot To All Celebrities
The SEC hopes that Kardashian's case is seen by other celebrities as a reminder that the law requires them to tell the public how much they were compensated to promote a virtual token or coin, per SEC Chair Gary Gensler.
"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," Gensler said. "we encourage investors to consider an investment's potential risks and opportunities in light of their own financial goals.
Kardashian isn't the first celebrity to violate the anti-touting provisions of the deferral securities laws. Floyd Mayweather Jr. and DJ Khaled paid more than $600,000 and $150,000, respectively, for violating the provisions. Meanwhile, Steven Segal was penalized $300,000 for doing the same.
