Kim Kardashian has agreed to pay a $1.26 million fine for promoting the EthereumMax cryptocurrency on her Instagram page.
The US Securities and Exchange Commission (SEC) said that the entertainment star received US$250,000 for promoting the cryptocurrency, without disclosing that the they paid for doing it
Kardashian also agreed not to promote crypto assets for three years.
Her lawyer told the BBC: “Mrs. Kardashian is pleased to have resolved this matter with the SEC.”
“She fully cooperated with the SEC from the beginning and remains willing to do whatever she can to assist in this matter,” he added.
Kim Kardashianboxer Floyd Mayweather Jr, basketball player Paul Pierce, and the creators of EthereumMax were sued by investors in January.
In the legal action they were accused of having collaborated to “misleadingly promote and sell” the cryptocurrency in a scheme of “pump and dump” designed to inflate the price before selling it to investors.
At the time, the cryptocurrency EthereumMax disputed the accusations.
Despite its name, EthereumMax has no legal or commercial connection to the other cryptocurrency platform, Ethereum.
EthereumMax invested a lot of money in partnering with celebrities, such as Kim Kardashian. It was a strategy that seemed to be working.
But as has happened to many cryptocurrencies, the fall was as dramatic as the rise.
Even if EthereumMax Had it retained the value it gained following the celebrity scandal, regulators in both the US and UK were already highly uncomfortable with the currency’s trading.
The cryptocurrency industry is still largely unregulated, but Kim Kardashian joins a growing list of individuals and companies being punished for promoting these high-risk products.
Gary Gensler, who chairs the SEC, called the case a “reminder” that celebrity endorsement doesn’t necessarily make a product worth investing in.
“Kardashian’s case also serves as a reminder to celebrities and others that they are required by law to disclose to the public when and how much they are paid to promote stock investing,” he said.
Later, in a YouTube video on crypto investing, he added: “Celebrity endorsement… doesn’t mean an investment product is right for you or even legit.
“Even if a celebrity endorsement is genuine, each investment has its own risks and opportunities.
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