The U.S. Securities and Exchange Commission (SEC) has brought charges on prominent American media personality and socialite Kim Kardashian for her role in promoting EthereumMax (EMAX). The regulatory watchdog, in a press release on Monday, highlighted Kardashian’s refusal to divulge her remuneration for the promotion as violation of the American securities laws.
Kim Kardashian did not disclose the amount she received as compensation
According to the SEC, Kim Kardashian has complied with the demands of the agency in settlement terms. Generally, these terms include the charge of $1.26M and a cooperation with the SEC’s current probe in the matter. The $1.26M charge includes a $260k forfeiture of the amount she received, and $1M in penalties for the violation.
The SEC’s charge on Kardashian notes that she refused to disclose a recompense of $250k for her promotion of EMAX tokens which it classifies as a security. This charge comes despite Kardashian’s disclosure that the promotion was an advertisement. According to the SEC, Kardashian violated its anti-touting rules.
The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,
Gurbir S. Grewal, Director of Division of Enforcements at the SEC, said.
Furthermore, Grewal remarked that the public ought to know if the promotion is a paid one or an unbiased one. According to him, this should help them in making a more informed investment decision. Notwithstanding, Kardashian omitted this crucial piece of information.
The SEC previously charged Ian Balina for promoting SPRK tokens in 2018
Speaking on the matter, SEC Chair Gary Gensler buttressed Grewal’s comments. Gensler mentioned that celebrities should pick a lesson from Kim Kardashian’s case. According to him, this lesson is the fact that there are laws that demand they disclose how much they are getting for promoting a security.
CNBC Squawk Box hosts Andrew Sorkin and Rebecca Quick deliberated on the matter on a Squawk Box episode. According to Sorkin, there remains a bit of unclearness in the SEC’s allegations. This is especially due to the fact that Kardashian indicated that the post was an ad. Consequently, they are looking to host Chair Gensler on the show to provide more insight.
This would not be the first time the financial regulator is bringing charges on a notable personality for crypto promotion. Last month, the SEC filed a lawsuit against renowned crypto investor Ian Balina. The lawsuit alleges that the media personality violated securities laws in his promotion of SPRK tokens in 2018.
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