The U.S. Securities and Exchange Commission (SEC) has fined Kim Kardashian with $1.26 million as she promoted a crypto token called EthereumMax (EMAX). The reason of the fine is linked to the fact that she didn’t disclose the payment of $250,000 that she received for the endorsement of this project. The information was released by the regulatory office on Monday in an official statement.
Kim Kardashian Fined for Promoting EthereumMax
The U.S. Securities and Exchange Commission has fined Kim Kardashian for promoting a crypto project without disclosing the payment she received for the endorsement. As per the press release, Kardashian agreed to settle the charges and paid $1.26 million in penalties. At the same time, she agreed to cooperate with the Commission’s ongoing investigation.
In the post that Kim Kardashian published a promotional post on Instagram with information about EMAX tokens, considered a security by the U.S. SEC. The post contained a link to the EthereumMax website and it provided instructions for investors to purchase this token.
SEC Chair Gary Gensler said:
“This case is reminder that, when celebrities of 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.”
At the same time, the report explains that the law requires celebrities and other people to disclose information to the public about how much money they received and when. In this particular case, Kardashian failed to disclose this information, violating an anti-touting provision of the federal securities laws.
It is worth taking into consideration that Kardashian agreed not to promote any other crypto asset securities for the next three years. Let’s not forget that cryptocurrencies work with bull and bear cycles. During bull markets, new crypto projects release their tokens and expect the public to buy them.
In 2017 with the expansion of the crypto industry, Initial Coin Offerings (ICOs) became the most popular type of crypto venture. Indeed, companies and projects from all over the world released their tokens to the market and tried convincing investors to buy their coins. Most of these tokens ended up dying or disappearing, which affected the credibility of the crypto industry.
In 2021, thanks to Bitcoin hitting new all-time highs ($69,000), decentralized finance (DeFi) projects released their own tokens as well. Most of these coins were used to reward users that staked their coins or deposited funds on these platforms. Nevertheless, with the bear market that started at the end of 2021, these tokens lost most of their value.
Non-Fungible Tokens (NFTs) have been also among the most popular crypto-related trends in recent years. Despite people buying some NFTs for very high prices in 2022, most of the NFT-related projects have already left the market. In some cases, NFT collections that were going to be released were cancelled or simply postponed. The next bull market could bring a similar trend to the crypto industry.
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