The Securities and Exchange Commission announced today that KimKardashian will pay a $1.26 million penalty for not revealing that she was paid $250,000 to promote the token The SEC said that he agreed to not promote anycryptocurrencies for 3 years.
According to the SEC order,Kardashian's failure to disclose this compensation violated Section 17(b) of the Securities Act, which makes it illegal for any person to promote a security without fully revealing the receipt and amount of such consideration from an issuer. The anti-touting provision is a part of this law.
An image with the following text was posted on her social media accounts in June 2021.
Are you guys into crypto????
This is not financial advice but sharing what my friends just told me about the Ethereum Max token!
A few minutes ago Ethereum Max burned 400 trillion tokens—literally 50% of their admin wallet giving back to the entire E-Max community.
The SEC said that the post contained an introductory video stating she had a "big announcement" and a link to the website where instructions were provided for potential investors to purchase Emax token. About a month after the launch of the token, the post was written by the reality TV star.
The SEC said that the EMAX token was offered and sold as securities under the Securities Act.
The SEC said that the reality TV star had more than 200 million followers on her social media accounts. She has 331 million followers and a net worth of over $1 billion.
The case reminds celebrities and others that the law requires them to reveal when and how much they are paid to promote investments in securities. A $250,000 payment was made toKardashian through an Intermediary.
AdvertisementThe SEC's Division of Enforcement Director Gurbir Grewal said that the federal securities laws made it clear that any celebrity who promotes a security must reveal the nature, source, and amount of compensation they received. Ms.Kardashian failed to tell investors that the publicity of a security is biased.
In November of last year, the SEC warned that endorsements on social media may be illegal if they don't reveal the nature, source, and amount of compensation paid.
The $1.26 million payment includes a $1 million penalty and $260,000 in disgorgement, which is related to her promotional payment. The payments were made without admitting or denying the findings. If feasible, the disgorgement and prejudgment interest will be given to harmed investors.
The SEC said that it's investigation is still going on and that the person who agreed to cooperate with the commission's investigation was reality TV star KimKardashian.
When celebrities endorse investment opportunities, it doesn't mean that those investment products are right for everyone. Caution is advised about investing in products endorsed by celebrities in a new video. The SEC page has 10,000 subscribers and the new video has been viewed over 2,300 times.
A lot of people were influenced by the post. Morning Consult released the results of a poll about the impact of the post.
Roughly one in five adults reported seeing something about Kardashian's crypto Instagram, according to a poll conducted in the days following the post, and the share was higher among crypto owners, at 31 percent.
Kardashian's conversion was also impressive: A striking 19 percent of respondents who said they heard about the post invested in EthereumMax as a result.
A number of celebrities have endorsed a range of cryptocurrencies. Morning Consult said that the audience of the currency is vastly different from what financial services leaders are used to serving.
All Rights Reserved © 2024
