The U.S. Securities and Exchange Commission (SEC) today announced charges against Kim Kardashian for allegedly promoting what the commission has called “a crypto asset security.” The asset in question is the EthereumMax (EMAX) token the reality TV superstar and influencer promoted last year.
Other celebrities involved in the promotion of EMAX, an Ethereum-based token that generated publicity last summer, included superstar boxer Floyd Mayweather Jr.—who famously appeared in a T-shirt with the EMAX logo at the stage of a Bitcoin maximalist conference in Miami in June 2021—and former NBA star Paul Pierce.
Per the SEC’s notice, Kardashian allegedly failed to disclose a payment of $250,000 she received for publishing an Instagram post, which provided instructions for potential investors to purchase EMAX tokens.
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.
This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.
— Gary Gensler (@GaryGensler) October 3, 2022
"This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors," SEC Chair Gary Gensler said in a statement. "We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals."
Kardashian agreed to pay $1.26 million to settle the charges, the regulator added. She will also cooperate with an ongoing investigation and has agreed not to promote crypto securities for three years.
"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," added Gensler.
Kardashian, however, neither admitted to nor denied the regulator’s findings, the SEC said.
Angry investors sue Kardashian
Kardashian, Mayweather, and Pierce were sued earlier this year for their promotions of EthereumMax, with investors accusing the celebrities of colluding with EMAX co-founders Steve Gentile and Giovanni Perone to pump the price of the token to lure buyers and then dump it, leaving the holders with a bag of worthless coins.
The price of EMAX peaked at $0.000000597636 in May last year after the token gained 1,420% in value in a matter of a single week, however, plunged dramatically afterward. The asset is changing hands at $0.000000004490 at the time of writing, or almost 100% from its all-time high, per CoinGecko.
Kardashian, however, is still battling the lawsuit—in August, her lawyers attempted to have the complaint against Gentile dismissed.
In a motion filed in a California U.S. District Court, the celebrity’s defense said that the token buyers were only relying on two of her Instagram posts—and in those posts, the celebrity didn’t give any investment advice.
Kardashian’s counsel also insists that the investors haven’t specified that they saw Kardashian’s posts ahead of time or that they bought the EMAX tokens because of the posts.