(Adds details on Kardashian, background on crypto-related
regulatory enforcement actions)
WASHINGTON, Oct 3 (Reuters) - Kim Kardashian has
promoted everything from appetite-suppressing lollipops to
melon-flavored liqueur to toilet paper, but it was her foray
into the murky world of cryptocurrencies that got her into hot
The reality television star and influencer has agreed to
settle charges of unlawfully touting a crypto security and to
pay $1.26 million in penalties and fees, the U.S. Securities and
Exchange Commission said on Monday.
Kardashian, who has 330 million followers on Instagram and
73.7 million followers on Twitter, failed to disclose that she
was paid $250,000 by crypto company EthereumMax to publish an
Instagram post about its EMAX tokens, the SEC said.
The SEC in November 2017 warned celebrities looking to cash
in on the emerging digital asset space that U.S. rules require
they disclose when they are being paid to endorse crypto tokens.
Since then it has pursued a handful of other celebrities,
including action film star Steven Seagal, music producer "DJ
Khaled" and boxer Floyd Mayweather Jr. for breaking that rule,
but Kardashian is arguably the most high profile.
Her post contained a link to the EthereumMax website, which
provided instructions for potential investors to purchase EMAX
tokens. "Sharing what my friends just told me about the
EthereumMax token!" the post read.
Under U.S. law, people who tout a certain stock or crypto
security need to disclose not only that they are getting paid to
do so, but also the amount, the source and the nature of those
payments, SEC Chair Gary Gensler said on Monday.
"This was really to protect the investing public - when
somebody is touting that stock and whether that's a celebrity or
an influencer or the like, and that's at the core of what this
is about," Gensler said in an interview with CNBC.
"I want to acknowledge Miss Kardashian cooperating and
ongoing cooperation. We really appreciate that," Gensler added.
Kardashian has agreed to pay the charge without admitting or
denying the SEC's findings. Her lawyer Michael Rhodes said
Kardashian was pleased to have resolved the case.
"She wanted to get this matter behind her to avoid a
protracted dispute. The agreement she reached with the SEC
allows her to do that so that she can move forward with her many
different business pursuits," Rhodes said in a statement.
Kardashian is also named, along with boxer Mayweather and
former basketball star Paul Pierce, in an ongoing lawsuit filed
in January by investors who allege they suffered losses after
the celebrities promoted EMAX.
EMAX tokens have declined around 98% since June 13, 2021,
when Kardashian posted about them on Instagram to her then 225
million followers, according to the website CoinMarketCap.com.
Last month, Kardashian, who has expanded her footprint in
the world of finance, launched a new private equity firm focused
on investing in consumer and media businesses.
Regulating cryptocurrency markets has been high on the SEC
chair's agenda this year, as prices of digital assets suffer
wild swings due to heightened recession fears, rising interest
rates and geopolitical turmoil.
(Reporting by Doina Chiacu in Washington, Manya Saini in
Bengaluru; additional reporting by John McCrank in New York;
Editing by Louise Heavens, Alexander Smith and Aurora Ellis)