Kim Kardashian’s crypto scandal has landed her in hot water with government regulators.
The TV superstar and developer has settled charges by the Communications and Communications Commission for failing to disclose the payment he received for promoting a crypto asset on his Instagram feed. , the department said Monday morning.
“This case is a reminder that when celebrities and investors endorse investment opportunities, including crypto asset banks, that doesn’t mean those investment products are right for all investors,” said Gary Gensler, SEC chairman, said in a press release. .
Gensler said the case is a reminder that the law requires celebrities and others to disclose when and how much they paid to promote investment in securities.
Kardashian, who is estimated to be worth $1.8 billion, agreed to pay $1.26 million to offset the costs of the promotion Meta‘s Instagram for crypto asset EthereumMax, the SEC said. He will also cooperate with the ongoing investigation and has agreed not to promote cryptocurrencies for three years, the director added.
Read more: Why you should be wary of investment advice from celebrities
However, Kardashian, who has built an advertising and lifestyle empire, neither accepted nor denied the director’s findings, the SEC said.
In a statement, an attorney for Kardashian said he was happy to settle the case.
“Kardashian has been very cooperative with the SEC from the beginning, and she’s willing to do whatever she can to help the SEC on this matter. She wanted to file this case.” behind him so that the controversy does not last long. to do that so that he can move forward in his many business activities,” the statement said.
The settlement helped Kardashian avoid a more intrusive process that could have involved the removal and collection of documents, according to attorney Duncan Levin, who represented fraudster Anna Sorokin, aka Anna Delvey. He also gave the SEC a chance to create a model of the star, he said.
“The SEC wants to send a message to other celebrities who support securities, so that their posts are not misconstrued as financial advice,” said Levin, who has served as a federal prosecutor and principal for the forgiveness of property in the New. York District Attorney’s Office.
Kardashian has been feeling the heat of the law for her EthereumMax promotion, which she posted on Instagram in June of last year. He began the post by asking his nearly 250 million Instagram followers, “ARE YOU INTO CRYPTO??? THIS IS NOT A SYSTEM SETUP BUT WHAT MY FRIENDS ARE SAYING ABOUT THE ETHEREUM TOKEN MAX.”
He was opposed by investors, including former NBA star Paul Pierce and legendary boxer Floyd Mayweather Jr. earlier this year for their promotion of EthereumMax, accusing them of exaggerating the value of the asset.
The SEC on Monday said Kardashian did not report that EthereumMax paid him $250,000, through an intermediary, to publish an advertisement for EMAX tokens, a crypto asset offered by EthereumMax. The post, which featured the hashtag “#ad,” is a link to the EthereumMax website, which offers instructions to users on how to buy tokens, the administrator added.
His failure to disclose the payment was a violation of federal securities laws, the SEC said. He agreed to pay $260,000, including back pay, plus interest, in addition to a $1 million penalty, the department said.
“Congress passed a law ten years ago called the Securities Act, and it was meant to protect the public,” Gensler told CNBC’s “Squawk Box” Monday morning. . “Part of that law said that if you distribute a tree you have to show if you’re going to get paid.”
Read the SEC’s settlement order here.
– CNBC’s Jack Stebbins contributed to this report.