Kim Kardashian, a lawyer-in-the-making, had a brush with the Securities and Exchange Commission. The agency charged the reality star and entrepreneur for promoting a cryptocurrency on her Instagram account without disclosing she was paid $250,000. The Skims founder had to expend $1.26 million in penalties to settle the charges. She promoted EthereumMax via an Instagram post last year and, as per her penalties, agreed to not participate in any crypto security endorsements for the next three years.
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.
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.
— Gary Gensler (@GaryGensler) October 3, 2022
Fortune shared SEC Chair Gary Gensler’s video on Twitter cautioning social media users to be careful when making investment decisions based on what products influencers and celebrities peddle online. “Celebrity endorsements don’t mean that an investment product is right for you, or even frankly that it’s legitimate,” Gensler said.
He added, “A celebrity or influencer’s incentives aren’t necessarily aligned with yours.” On the other hand, Kim was careful to add the #AD tag at the bottom of the post, but the disclaimer was not enough to satisfy the SEC. According to the filing: “Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion.” Kim’s lawyer told BBC News: “Ms. Kardashian is pleased to have resolved this matter with the SEC.” The lawyer said: “Kardashian fully cooperated with the SEC from the very beginning, and she remains willing to do whatever she can to assist the SEC in this matter. She wanted to get this matter behind her to avoid a protracted dispute.”
