Kim Kardashian will pay a $1.26 million settlement to the United States Securities and Exchange Commission for promoting crypto on her Instagram page without disclosing that she was paid. The deal — announced Monday morning by the SEC — marks one of the most high-profile examples of how federal regulators are working to end celebrity crypto security endorsements.
“This case reminds us that when celebrities or influencers endorse investment opportunities, including crypto asset securities, it does not mean those investment products are suitable for all investors,” the chairman said. of the SEC, Gary Gensler, in a press release. “We encourage investors to consider the potential risks and opportunities of an investment in light of their own financial objectives.”
Kardashian promoted the crypto asset, EthereumMax, on her Instagram to her more than 330 million followers in June 2021 for $250,000. She included the hashtag #ad with her post, but SEC officials said that was not enough to comply with financial investment and securities laws.
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READ MORE: Kim Kardashian Settles With SEC Over Promoting Crypto
Kevin Werbach, professor at the Wharton School of the University of Pennsylvania who designed his The Economics of Blockchain and Digital Assets program, said the SEC targeting Kardashian sends a message to the general public.
“Kardashian is a top personality,” he said. “People will pay attention to an SEC action against a celebrity who basically admitted she broke the law. It makes a statement.
Werbach said the charges and settlement imply that the SEC is concerned about security risks.
“We have investor and consumer protection laws because time and time again these groups are exploited by promoters and fraudsters,” he said. “Digital assets are exciting innovations, but when promoted as investments, it should involve the same protections as other investors.”
» READ MORE: EXPLAINER: How cryptocurrencies work (and how they don’t)
He said he believes the SEC will continue to prosecute influencers who improperly promoted digital assets. Earlier this year, Kardashian and other celebrities, including Floyd Mayweather, were named defendants in a class action lawsuit accusing them of artificially inflating the price of EthereumMax. Reese Witherspoon, Gwyneth Paltrow, the D’Amelio sisters and other high profile stars have been criticized in the past for promoting cryptocurrency without also discussing the risks.
Kardashian’s attorney said in a statement to the media that the celeb was happy to “move on” and “put this case behind her.” Drexel University finance professor Daniel Folkinshteyn said Kardashian could have easily avoided those accusations.
“In practice, all you need to do to avoid violating the laws here is to disclose the compensation received in exchange for the promotional activity, so as not to mislead potential investors into thinking that you are providing your own unbiased opinion,” he said.
As part of her settlement, Kardashian can’t promote crypto stocks for three years, lost the payment she received from EthereumMax, and agreed to pay a $1 million fine. But what does that mean for someone whose net worth is estimated at $1.8 billion? Apparently, not much.
We crunched the numbers and figured out what kind of sales Kardashian would need to make to repay that $1.26 million:
2,000 complete SKKN by Kim skincare sets, priced at $575 each
5,000 pairs of Good American jeans from her sister Khloé, sold for $245 each
6,300 bottles of half-sister Kendall Jenner’s limited-edition 818 Tequila Reserve lot, priced at $200 each
703 Balenciaga trash bags – like the one she received – worth $1,790 each
3,150 Yeezy Gap coats worth $400 each
1,625 pairs of Christian Louboutin heels, costing $775 each
About a quarter and a quarter of promotional posts for a fast fashion company on Instagram, valued at $1 million each, but reportedly declining
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Crypto Kim Kardashian Fees: Settlement, Net Worth Explained
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