American socialite Kim Kardashian will pay a $1.26 million fine for her role in promoting a cryptocurrency scheme called EthereumMax (EMAX).
On October 3, the US Securities and Exchange Commission (SEC) announced that charges would be filed against Kardashian for “advertising on social media to secure crypto-assets offered and sold by EthereumMax” without disclosing the payment received for her participation in the ad.
Kardashian has agreed to settle the charges and pay $1.26 million in penalties, money and interest, and intends to cooperate with the Securities and Exchange Commission on further investigations into the EthereumMax project.
The ad noted that Kardashian did not disclose the $250,000 she received for posting on her Instagram profile to promote EMAX icons, with a link to the project’s website.
The SEC order found that Kardashian violated a provision of the federal securities law that prohibits advertising. This has been the case with other known cryptocurrency securities violations involving the Securities and Exchange Commission in the past.
Kardashian has neither admitted nor denied the findings of the Securities and Exchange Commission, but agreed to settle the charges. This was dismantled for $260,000 in the event of a cancellation plus a $1 million fine. Kardashian also agreed not to market any crypto assets until 2025.
SEC President Gary Gensler has also used the order to advise the public to exercise due diligence when investing in cryptoassets, as well as to remind celebrities and influencers of their obligation to disclose payments related to securities promotions.
“This case is a reminder that when celebrities or influencers endorse investment opportunities, including securities in cryptoassets, this does not mean that these investment products are suitable for all investors. We encourage investors to consider potential risks and investment opportunities in light of their financial goals.”
Kardashian’s legal team also filed a motion to dismiss the class-action lawsuit against the businesswoman and other American celebrities in August 2022. In January 2022, Kardashian and several prominent American social media influencers received a class-action lawsuit alleging they misled investors by promoting social media EthereumMax .
Kardashian posted Instagram Stories promoting the project in June 2021, and the likes of boxing superstar Floyd Mayweather were also involved in a lawsuit after promoting an Ethereum-based token ahead of a celebrity boxing match against YouTuber Logan Paul during the same period.
Fans can buy pay-per-view tickets with the token, which has skyrocketed after promoting the Kardashians and other influencers. After that, the value of EthereumMax dropped, leaving many people without money.
The original lawsuit, which involved Kardashian, Mayweather and eight others, alleged that company executives colluded with celebrities to make misleading claims about the token and their control over most of the tokens. Steve Gentile and Giovanni Perone are listed as co-founders of the project.