- Kim Kardashian agreed to pay the SEC $1.3 million for promoting Ethereum Max this week.
- Other celebrities such as Floyd Mayweather and Jake Paul have been hit with lawsuits from crypto investors.
- The SEC ruling is a “pure celebrity warning,” one analyst said.
Several celebrities promoting cryptocurrencies may have been watching nervously this week following Kim Kardashian’s settlement with the Securities and Exchange Commission over undisclosed payments to promote a token on her Instagram account.
Kardashian agreed on Monday to pay the SEC $1.26 million to settle an ongoing investigation into her promotion of the Ethereum Max token.
The reality star failed to disclose that she was paid $250,000 to post an Instagram story in June 2021 with EMAX – a token with a market cap of just $11.7 million that has nothing to do with ethereum. The reality star and influencer violated a 1930s-era securities law that says people who tout investments must disclose whether they’re being paid to do so and say specifically how much they were paid.
SEC Chairman Gary Gensler appeared to send a warning to other celebrities in a statement issued after the Kardashian ruling.
“This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it does not mean that these investment products are suitable for all investors,” he said.
“Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are being paid to promote investment in securities,” Gensler added.
Kardashian isn’t the only celebrity to be slammed for promoting EMAX.
Crypto investors sued boxing legend Floyd Mayweather and basketball Hall-of-Famer Paul Pierce as well as 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 shilling SafeMoon as part of a pump-and-dump scheme.
The SEC’s settlement with Kardashian is the first sign that the regulator will crack down on celebrities accused of participating in such schemes, analysts said.
“Kim Kardashian’s $1.26 million fine for promoting Ethereum Max is a stark warning to other celebrities not to dabble in the murky world of cryptocurrency to make a quick buck,” said Hargreaves Lansdown’s Suzanne Streeter.
“Regulators are clearly horrified at the damage that superstar celebrities can do to the bank balances of vulnerable consumers, who are affected by almost every move they make,” he added. “Get-rich-quick delusions can spread very quickly on social media with speculation fueled by reposts from millions of followers.”
The SEC declined to comment further.
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