Kim Kardashian is paying $1. 26 million as part of a settlement with the Securities and Exchange Commission amid allegations that she illegally promoted an undisclosed cryptocurrency that she paid for the promotion.
Kardashian is paying for the settlement without admitting or denying the SEC’s findings, the firm said Monday. It also agreed to announce any crypto asset securities for 3 years.
The fine is pegged to a cryptocurrency called EthereumMax, or EMAX, which has been touted among investors as a disruptive new cryptocurrency. crypto asset and were the subject of a class-action lawsuit in January over their endorsements.
“This case is a reminder that when celebrities or influencers approve investment opportunities, adding crypto asset securities, it means those investment products are suitable for all investors,” SEC Chairman Gary Gensler said in a statement.
EMAX was introduced last May with an initial trading volume of $16. 1 million, according to CoinMarketCap’s knowledge. That figure rose after Kardashian and Pierce’s social media posts, as well as Mayweather’s incentives such as signed boxing gloves, ringside tickets and discounts for those who purchased EMAX tokens online combat tickets, according to the lawsuit. At one point, EMAX trading volume grew to nearly $108 million.
The virtual currency’s creators, Steve Gentile of Connecticut and Giovanni Perone of Florida, sold their EthereumMax holdings “for really broad profits” as the hype around the coin mounted.
The value of EMAX fell 3. 3% on Monday morning to 0. 000000004246 cents, according to CoinMarketCap.
At the time she promoted EMAX, Kardashian had around 225 million followers on Instagram, right down to securities regulators.
“Kardashian promoted the security of crypto assets on her Instagram account in exchange for a monetary payment from the issuer,” the SEC said in a court filing.
The Kardashian firm would cooperate with her ongoing investigation.
Prosecuting celebrities who traditionally make products has proved tricky, as lawyers must prove that the user made money illegally. In Kardashian’s case, the SEC said it did not disclose that she paid $250,000 to post on her Instagram account about AMAX tokens. Kardashian’s post also contained a link to the EthereumMax website, which provided commands for potential investors to purchase EMAX tokens.
“Federal securities legislation obviously states that any celebrity or other user who promotes the security of a crypto asset will have to disclose the nature, source, and amount of the payout they earned in exchange for the promotion,” said Gurbir Grewal, director of the SEC’s enforcement division. . in a prepared statement.
The SEC said Kardashian’s settlement includes about $260,000 in cashback, covering the amount she earned selling cryptocurrencies plus interest, as well as a $1 million penalty.
Kardashian, the first celebrity to capture the attention of regulators for her involvement in cryptocurrencies. In 2018, the company paid fees against Mayweather and music maker DJ Khaled for failing to disclose invoices they earned for selling investments in the virtual currency.
The Associated Press contributed to this report.
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