Kim Kardashian Fined $1 Million by the SEC for Cryptocurrency Promotion

Michelle Chapman and Ken Sweet, Associated Press

Posted Monday, October 3, 2022 at 3:23 PM EDT

Last updated Monday, October 3, 2022 4:46 pm EDT

The long list of celebrities promoting cryptocurrencies has been shortened. Kim Kardashian has been banned from doing so for three years, and will pay a $1 million fine, to settle federal charges that she recommended crypto security to her 330 million Instagram followers without making it clear that she was paid to do so.

The reality TV star must also forfeit the $250,000 he was paid for the Instagram post about Ethereum Max tokens, plus interest, according to a Securities and Exchange Commission settlement announced Monday.

Kardashian is the latest celebrity to get caught up in regulations requiring full disclosure by people who are paid to promote financial products.

In 2020, actor Steven Seagal agreed to pay more than $300,000 as part of a similar settlement with the SEC, which also barred him from furthering investments for three years.

In 2018, the SEC settled charges against professional boxer Floyd Mayweather Jr. and music producer DJ Khaled for failing to disclose payments they received for promoting investments in a digital currency.

Many celebrities and athletes regularly promote cryptocurrencies through advertisements on TV and online without breaking any laws. Matt Damon, Tom Brady, Reese Witherspoon, and Gwyneth Paltrow are among those who have used their fame to spread cryptocurrency enthusiasm.

SEC Chairman Gary Gensler said in a statement that Kardashian’s settlement “serves as a reminder to celebrities and others that they are required by law to disclose to the public when and how much they are paid to promote securities investing.” ”.

Gensler also used Monday’s flashy celebrity settlement as an opportunity to educate the public, posting a humorous YouTube video warning of the potential dangers of investment advice doled out by the rich and famous.

“Bravo for SEC Chairman Gensler, whose action demonstrates that no celebrity, no matter how big or famous, who profited from pushing these risky cryptocurrency investments should be able to just walk away,” said Adam Moskowitz, a lawsuit attorney. class action lawsuit that is currently suing Mark. Cuban for launching the Voyager Digital company before it failed.

The SEC said Kardashian agreed to cooperate with an ongoing investigation, though it did not provide details about that investigation.

An attorney for Kardashian, Patrick Gibbs, said that she “cooperated fully with the SEC from the beginning and remains willing to do everything possible to assist the SEC in this matter.”

While Kardashian is well known for her role on the television series “The Kardashians,” she is also a successful businesswoman with clothing and skincare brands.

The value of many cryptocurrencies has skyrocketed during the pandemic amid a surge in highly speculative investment. More recently, amid a decline in the general markets, the value of many cryptocurrencies has plummeted.

Bitcoin has lost more than half its value in 2022, falling to around $19,000 on Monday. The Ethereum Max token that Kardashian promoted has dropped in value by more than 90% since its peak last May.

After wild swings in crypto valuations and the exposure of dozens of scams, the crypto industry is under increasing scrutiny from the SEC and Congress. A bipartisan proposal last month would hand regulatory authority over bitcoin and ether, two popular cryptocurrencies, to the Commodity Futures Trading Commission.

This story has been updated to correct the spelling of the actor’s last name. It’s Steven Seagal, not Segal.

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