Kim Kardashian has been fined $1.26 million by American market regulators after plugging a crypto token on social media without disclosing that she was paid $250,000 to do so.
The television personality and businesswoman was charged by the Securities and Exchange Commission, which found that she had violated the anti-touting provision of federal securities laws.
Celebrities must tell their followers when they are being paid to promote investments online, the watchdog stressed.
Kardashian, 41, marketed EMAX tokens, a crypto asset security offered by the operator EthereumMax, on her Instagram account. Her post contained a link to instructions as to how the tokens could be bought but no clarification that she had been paid to share it.
Kardashian, who did not admit or deny the SEC’s findings, has agreed to settle its charges. She cooperated with the SEC’s investigation and has agreed to refrain from promoting any crypto asset securities for three years. Her representatives did not immediately respond to a request for comment.
Gary Gensler, the SEC’s chairman, 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.”
Having built her fame through appearances on the reality TV series Keeping Up With the Kardashians and its successor, The Kardashians, as well as her presence on social media, Kardashian has enjoyed considerable success in business. Her personal fortune stands at $1.8 billion, according to Forbes.
Skims, the clothing business she set up in 2019, was valued at $3.2 billion in a funding round announced in January. Coty, the consumer multinational behind brands including Max Factor and Rimmel, bought a 20 per cent stake in KKW Beauty, her cosmetics and fragrance business, for $200 million in 2021. Kardashian also recently launched SKKY Partners, a private equity firm, with Jay Sammons, an industry veteran.
The SEC’s fine includes a $1 million penalty and $260,000 in disgorgement, representing the initial payment plus interest.
Gurbir Grewal, director of the SEC’s enforcement division, said: “The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source and amount of 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.”
Kim Kardashian fined $1.26m for touting crypto token on social media