- Kim Kardashian agreed to pay the SEC $1.3 million to promote Ethereum Max this week.
- Other celebrities, including Floyd Mayweather and Jake Paul, have been hit by crypto investor lawsuits.
- The SEC’s ruling is a “strong warning for celebrities,” one analyst said.
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Several celebrities promoting crypto may have watched nervously this week after Kim Kardashian settled with the Securities and Exchange Commission over undisclosed payments for promoting a token on an Instagram account.
Kardashian on Monday agreed to pay the SEC $1.26 million to settle an ongoing investigation into her sponsorship of the Ethereum Max token.
The reality TV star didn’t disclose that she was paid $250,000 to publish an Instagram story in June 2021 in Schilling EMAX – a token with a market cap of just $11.7 million that hasn’t been used in any related to Ethereum. The reality star and influencer ran afoul of a 1930s securities law that required people promoting investments to disclose whether they were being paid for it and say exactly how much they paid.
SEC Chairman Gary Gensler appeared to issue a warning to fellow celebrities in a statement following the Kardashian ruling.
“This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it doesn’t mean those investment products are suitable for all investors,” he said.
“Ms. Kardashian’s case is also a reminder that celebrities and others are legally required to disclose to the public when and how much they are being paid to encourage investing in securities,” Gensler added.
Kardashian isn’t the only celebrity rebuked for promoting EMAX.
Crypto investors sued boxing legend Floyd Mayweather and basketball Hall of Famer Paul Pierce and Kardashian in January, filing a lawsuit alleging the three celebrities tricked fans into buying the token before its value plummeted by 98%.
In February, another class-action lawsuit accused celebrities including YouTuber Jake Paul, rappers Lil Yachty and Soulja Boy, and former Backstreet Boys member Nick Carter of shelling SafeMoon as part of a pump-and-dump scheme.
The SEC’s settlement with Kardashian is the first sign the regulator will crack down on celebrities accused of participating in such schemes, analysts said.
“The $1.26 million fine slapped on Kim Kardashian for promoting Ethereum Max is a stark warning to other celebrities not to dabble in the dark world of crypto for a quick buck,” said Susannah Streeter of Hargreaves Lansdown.
“Regulators are clearly appalled by the damage superstar celebrities can do to the bank balances of vulnerable consumers who are impacted by almost every move they make,” she added. “The get-rich-quick delusions can spread far too quickly on social media, with speculation fueled by reposts from millions of followers.”
The SEC declined further comment.
Continue reading: After the “Squid Game” cryptocurrency turned out to be a scam, 4 experts explain the 3 clever ways to spot a fraudulent token and invest safely
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