Why Kim Kardashian was charged by the SEC for crypto advertisement

Kardashian paid over $1.2 million to the SEC after she promoted a cryptocurrency token called EthereumMax.

Mega-influencer Kim Kardashian agreed to pay $1.26 million in penalties to the Securities and Exchange Commission to settle charges that she illicitly touted a cryptocurrency token on social media without disclosing how much she was paid for the promotion, the SEC said Monday. 

In June 2021, Kardashian posted an Instagram story inviting her 328 million followers to invest in EthereumMax. 

“This is not financial advice,” Kardashian wrote in her story. “But sharing what my friends just told me about the Ethereum Max token!” Among other hashtags, she included the word “ad.”

Kardashian was one of many celebrities who were part of a crypto craze last year, which included intense interest in and advertising and funding of cryptocurrencies and their related technologies. Cryptocurrencies are digital assets, such as Bitcoin, that can be bought and sold via cryptocurrency exchanges. EthereumMax is a cryptocurrency token, which is a tradable asset built on pre-existing cryptocurrency technology. It was one of several tokens that raised suspicions from skeptics because of the amount of promotion it was getting online.

SEC Chair Gary Gensler said in a news release unveiling the charges that the law requires celebrities “to disclose to the public when and how much they are paid to promote investing in securities.” The SEC said Kardashian failed to disclose that she had been paid $250,000 to promote the token. While Kardashian didn’t admit to wrongdoing in the settlement, according to the SEC news release, she agreed she won’t advertise anything crypto-related for the next three years. 

https://www.nbcnews.com/tech/crypto/kim-kardashian-crypto-post-sec-charges-cryptocurrency-rcna50461

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