New Delhi: Kim Kardashian has agreed to pay $1.26 million to resolve claims made by the Securities and Exchange Commission that she violated US law by endorsing a cryptocurrency token without disclosing that she was being paid for the marketing, as per a report by Moneycontrol.
According to the SEC, Kardashian received $250,000 in exchange for posting on her Instagram account promoting EthereumMax’s EMAX tokens, a cryptocurrency asset. In agreeing to the settlement, Khardashian did not confirm or refute the regulator’s accusations.
The SEC has repeatedly emphasised that celebrities endorsing cryptocurrencies that it considers securities must disclose to investors if they are being compensated for the endorsement. To punish them for failing to disclose funds they received for promoting initial coin offerings, the regulator fined boxer Floyd Mayweather and music producer DJ Khaled in 2018.
“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,” SEC Chair Gary Gensler said in a statement on Monday. “We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.”
The primary regulator on Wall Street has long claimed that many virtual tokens are securities and fall under its purview. The SEC uses a legal standard that was established by a Supreme Court case from 1946 to decide whether a certain item qualifies as a security. According to that paradigm, an asset may fall under SEC jurisdiction if investors contribute funds with the goal of benefiting from the leadership of the organisation.