Kardashian allegedly fell foul of the financial regulators after she promoted “EMAX tokens,” a crypto-asset, without disclosing that she had been paid to do so. The socialite had been paid $250,000 by a crypto-exchange website called EthereumMax to promote that particular cryptocurrency and drive potential buyers to its website. The SEC claims that the Instagram post that landed Kardashian in hot water contained a link to the EthereumMax website, which then had instructions on purchasing the cryptocurrency. The organization is also hoping the fine will serve as a warning to other public figures who are hoping to profit in a similar manner. Speaking about the ruling, SEC Chair Gary Gensler said:
“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. We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals. Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.” Alongside the ruling, the SEC has released a video warning people about the dangers of making an investment based on a celebrity endorsement.
Several celebrities have made money either by purchasing or endorsing cryptocurrencies and other digital assets like NFTs. Anti-touting laws like the ones Kim Kardashian appears to have violated exist to protect potential investors and stop individuals from promoting something as an investment opportunity without disclosing if they have been paid to do so. While the SEC is free to prosecute violations of its regulations, crypto-endorsing celebrities are open to private legal action.
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