Why was Kim Kardashian fined more than $1 million by the SEC?
Kim Kardashian has accepted a fine of $1.26 million by the U.S. Securities and Exchange Commission (SEC) for illegally promoting on social media a crypto asset security offered and sold by EthereumMax (EMAX).
Moreover, without disclosing the payment, she received for the promotion.
Floyd Mayweather and Paul Pierce endorsed the EMAX tokens and were also targeted in the class action lawsuit that started last January.
Kim Kardashian’s Instagram post to her 225 million followers read, “Are you guys into crypto? this is not financial advice but sharing what my friends told me about the Ethereum max token!”
The post also included a link to the EthereumMAX website that contained all the necessary information about the coin and how to buy it.
In the following hours, the coin surged nearly 40% before tumbling 99% from its all-time high. Kim Kardashian has reportedly neither admitted nor denied the reports.
Still, according to the SEC, the star agreed to pay the $260,000 fee she charged the EMAX administration and failed to disclose.
Additionally, she was fined $1 million by the SEC for promoting an unregistered security. She has also been barred from promoting any crypto ads for 3 years.
Additionally, she agreed to cooperate with the ongoing investigation against EMAX.
Gary Gensler, chairman of the SEC stated in a press release:
“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.”
The SEC’s decision opens a wider debate about promoting cryptocurrencies and other products on social media.
The influencer either does not disclose their sponsorship on the post or does not possess the necessary qualifications or experience to promote such products.
The so-called “pumps and dumps” whereby traders “buy the rumor and sell the news” is unfortunately common nowadays.
Ultimately, it has sparked renewed debate about whether the Security Act passed by Congress many years ago is sufficient for today’s challenges.
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Editor’s Note: Michael Peres (Mikey Peres) is an entertainment journalist, software engineer, and author best known for founding various technology, media, and news startups.