Kim Kardashian is in the news yet again, and this time she is in trouble with a federal government agency, forcing her to pay over $1 million dollars in penalty pay. The United States Securities and Exchange Commission has announced charges against Kim Kardashian for the role she played in promoting a particular crypto currency on a social media post.
The U.S. Securities and Exchange Commission is responsible for overseeing securities exchanges, brokers and dealers, investment advisors, and mutual funds. The agency’s goal is to promote fair dealing and to properly disclose important market information, all the while preventing fraud. The agency essentially protects investors by sharing information about companies to help those investors make informed decisions and invest with confidence. So, what did Kim Kardashian do to be put on their “naughty list”?
The U.S. Securities and Exchange Commission reported that Kim Kardashian was paid $250,000 to make an Instagram post regarding EMAX tokens, sharing a link that provided instructions for all 331 million of her Instagram followers to purchase the EMAX tokens. EMAX tokens is a type of crypto token on the Ethereum network.
So, what was Kim Kardashian’s crime? The U.S. Securities and Exchange Commission requires all celebrities and individuals promoting crypto-currency to disclose the nature, source, and amount of compensation they received in exchange for the promotion – unfortunately, Kim Kardashian did none of these things on her recent Instagram post. The U.S. Securities and Exchange Commission charged Kim Kardashian with violating its anti-touting provision, which prohibits the publishing or circulating of an article or communication for “a consideration received” without fully disclosing that consideration. In Kim Kardashian’s case, although EMAX tokens paid her $250,000 for an Instagram post, she did not fully disclose her the consideration between the social media post and the $250,000 payment. As a penalty, the U.S. Securities and Exchange Commission allowed Kim Kardashian to pay $1.26 million without admitting or denying the U.S. Securities and Exchange Commission’s findings. The penalty fee included $260,000 in disgorgement fees, which represents her promotional payment and prejudgment interest, and a $1 million penalty. Further, Kim Kardashian agreed not to promote any crypto asset securities until at least 2025.
Kim Kardashian has since taken the EMAX tokens post off Instagram. She, nor members of her PR team have commented on the SEC’s findings. To make matters worse, even though Kim Kardashian may make a payment soon to satisfy her penalty charges, the SEC will still pursue an ongoing investigation. It isn’t clear whether the SEC’s decision is final or if Kim Kardashian could end up paying a bigger fee or be subject to stiffer punishment. The SEC has made it clear, however, to celebrities and influencers alike to watch what they post and make sure that their posts comply with the Securities Act of 1933.