The US Securities and Exchange Commission has charged Kim Kardashian for touting on social media a crypto asset security offered and sold by EthereumMax without disclosing what she was paid for the promotion.
Ms Kardashian agreed to settle and pay $1.26 million in “penalties, disgorgement, and interest”, and co-operate with the SEC’s continuing investigation, the regulator said.
She failed to disclose that she was paid $250,000 to publish a post on her Instagram account about Emax tokens, the crypto asset security being offered by EthereumMax, the commission said.
A post by her contained a link to the EthereumMax website, which provided instructions to potential investors on how to purchase Emax tokens.
“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,” said SEC chairman Gary Gensler.
“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.”
Last month the billionaire reality television star and businesswoman co-founded a private equity company that will focus on sectors including consumer products, digital and e-commerce, consumer media, hospitality and luxury.
Ms Kardashian, who has an estimated net worth of $1.4 billion, co-founded SKKY Partners with Jay Sammons, the former New York-based global head of consumer, media and retail at the Carlyle Group, one of the world's largest private equity companies.
Gurbir Grewal, director of the SEC’s division of enforcement, said federal securities laws were 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,” Mr Grewal said.
Ms Kardashian breached the anti-touting provision of the federal securities law, according to the SEC.
Without admitting or denying the SEC’s findings, Ms Kardashian agreed to pay the $1.26m fine.
The penalty includes about $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest, and a $1m fine.
Ms Kardashian also agreed to not promote any crypto asset securities for three years.