Kim Kardashian has found there is a price to be paid when influencers hawk investment opportunities like crypto to their adoring fans without disclosing they are getting paid to do so.
The Securities and Exchange Commission announced a $1.26 million settlement Monday morning with the celebrity for not disclosing she had been paid $250,000 to promote a crypto token sold by EthereumMax.
Ms. Kardashian had promoted the crypto product as a good investment on her Instagram page in June 2021.
Ms. Kardashian, 41, became famous through her family’s long-running reality TV show that chronicles their daily lives. One of the hallmarks of her brand is promoting the products she uses and wears.
Last year, a number of celebrities began endorsing crypto assets in commercials. The S.E.C. has warned a number of times that investors should not buy any investment simply because it has the backing of a celebrity. Regulators have a long history of going after paid celebrities and others for not disclosing that they have been compensated for promoting an investment product.
During the pandemic, a rush of celebrities and athletes joined forces with promoters of special purpose acquisition companies, or SPACs. That led the S.E.C. to issue an alert warning investors to be wary of the blank-check company stock offerings.
“Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities,” said Gary Gensler, the S.E.C. chair, in a statement announcing the settlement.
An attorney for Ms. Kardashian was not immediately available for comment.
In the Instagram post from June 2021, Ms. Kardashian began by telling her followers: “This is not financial advice but sharing what my friends have just told me about the EthereumMax token!”
The S.E.C. has maintained that crypto tokens are investment products subject to its regulatory oversight.
In the settlement order with Ms. Kardashian, the S.E.C. said she was paid by EthereumMax through an intermediary. The S.E.C. also said that it gave Ms. Kardashian consideration for cooperating with regulators and that she has continued to cooperate with the investigation.