The Securities and Exchange Commission (SEC) has charged reality TV star Kim Kardashian with unlawfully advertizing crypto project EthereumMax without disclosing the payment she had received for a sponsored promotion, per the SEC press release.
According to the SEC, Ms. Kardashian failed to clearly state that she had received $250,000 to promote EMAX tokens on her Instagram account, where 331 million people follow the celebrity, as required by law. The event is considered by the SEC to have violated anti-touting provisions of federal securities laws.
Kardashian has agreed to pay $1.26 million in penalties, disgorgement, and interest, and vowed to not promote any crypto asset securities for a period of at least three years.
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,” SEC Chairman Gary Gensler said on Twitter.
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.— Gary Gensler (@GaryGensler) October 3, 2022
This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.
A Pump and Dump Project
In June 2021, Kardashian shared an Instagram story in which she promoted EthereumMax, a project of no relation to Ethereum. The promotion included a link to the EthereumMax website, where potential investors could purchase EMAX tokens.
The token was marketed as an option for purchasing pay-per-view tickets. Just one week after Kardashian posted the video to her followers, the project gained 116,000% in value, after which a rug-pull occurred almost immediately, leaving thousands of investors dumbfounded, and out of pocket.
Many saw the event as a classic “pump-and-dump”, filing a class-action lawsuit against Kardashian, boxer Floyd Mayweather, basketball player Paul Pierce, Co-Founders of the project Steve Gentile and Giovanni Perone, and others on those grounds.
On the Flipside
- Steve Gentile and Giovanni Perone, the Co-Founders of EthereumMax, as well as many others involved in the case, have yet to be charged.
Why You Should Care
Taking investment advice from influencers on social media entails major risks. Investors should always do their research before investing in any asset.
Read about Kim Kardashian’s efforts to evade the EMAX lawsuit:
Read more about the SEC’s latest stance on crypto: