When it comes to crypto currency, the SEC is sending a message to everyone engaging in unlawful schemes.
The U.S. Securities and Exchange Commission (SEC) is charging Kim Kardashian for “unlawfully touting” a “crypto security,” the agency announced on Monday morning.
The SEC says that Kardashian was in violation of its rules when she promoted a “crypto asset security offered and sold by EthereumMax” without the necessary disclosure that she was paid to promote it.
Kardashian has already agreed to settle the case, with a $1.26 million penalty payment, and to help the SEC with its ongoing investigation.
The agency specified that Kardashian should have disclosed a $250,000 payment she received to publish a post about EtherumMax’s EMAX tokens on her Instagram account.
The settlement reached with the SEC by Kardashian includes a $260,000 payment that represents that original amount, plus interest, as well as $1 million in penalties.
SEC Chair Gary Gensler separately posted a message on Twitter about the settlement, noting that that celebrity endorsements should not be construed as financial advice basically.
This could be a shot across the bow that indicates more enforcement activity is on the table for high-profile celebs who rode the crypto wave by touting specific assets to fans.
Gensler has repeatedly expressed the opinion that crypto assets fall under existing securities laws, as do other new technologies that mirror traditional securities in form and function.
This is definitely an attention-grabbing way to put the SEC’s regulatory force where Gensler’s mouth is.
Kardashian, whose post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens, has agreed to pay the charge levied without admitting or denying the SEC’s findings.
“I want to acknowledge Miss Kardashian cooperating and ongoing cooperation. We really appreciate that,” Gensler added.
Kardashian is pleased to have resolved the case and fully cooperated with the SEC, her lawyer Michael Rhodes said.
“She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits,” Rhodes said in a statement.
Last month, Kardashian, who has expanded her footprint in the world of finance, launched a new private equity firm focused on investing in consumer and media businesses.
Regulating cryptocurrency markets has been high on the SEC’s agenda this year, as prices of digital assets suffer wild swings due to heightened recession fears, rising interest rates and geopolitical turmoil. read more read more
The U.S. regulator also charged Boxer Floyd Mayweather Jr. and a music producer known as “DJ Khaled” in November 2018 for allegedly not disclosing payments they received for promoting investments in initial coin offerings.
Neither Mayweather nor Khaled Mohamed Khaled admitted or denied the SEC’s charges, but agreed to pay a combined $767,500 in fines and penalties.