Kim Kardashian just agreed to pay a $1.26 million fine for promoting cryptocurrency on Instagram! Here is what you need to know…
Kim Kardashian Fined $1.26 Million For Promoting Crypto!
On Monday, October 3, 2022, Kim Kardashian agreed to pay a $1.26 million fine for promoting the cryptocurrency, EthereumMax (not to be confused with Ethereum) on Instagram.
The Securities and Exchange Commission (SEC) charged that the reality TV star received $250,000 to advertise EthereumMax without disclosing she was paid to promote it.
She also agreed not to promote any crypto assets / securities for three years.
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.
We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.
– SEC Chair Gary Gensler
The settlement comprised of a $1 million fine, seizure of the $250,000 payment she received, plus interest, coming up to a total of $1.26 million.
Despite the large sum, the fine will not bother Kim Kardashian too much. With a net worth estimated at $1.8 billion, the $1.26 million fine is roughly equivalent to an $85 fine for a typical US family with a net worth of $122,000.
Her lawyers hinted as much in the statement they released :
Ms. Kardashian is pleased to have resolved this matter with the SEC.
Kardashian fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the SEC in this matter.
She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.
As you can tell – the fine was more like dust in her eyes than a lesson to learn from. I doubt it even feels like a slap on the wrist to her.
How Kim Kardashian Got Into Trouble Promoting Crypto…
On June 13, 2021, Kim Kardashian promoted a new cryptocurrency called EthereumMax (not to be confused with the famous and more established Ethereum) on Instagram.
Are you guys into crypto???? This is not financial advice but sharing what my friends told me about the Ethereum Max token!
A few minutes ago Ethereum Max burned 400 trillion tokens – literally 50% of their admin wallet giving back to the entire E-Max community.
#EMax #DisruptHistory #EthereumMax #WTFEMax #GIOPEmax @EthereumMax #Ad
Swipe up to join the E-Max Community
She had 225 million followers on Instagram at that time, and EthereumMax paid her $250,000 for that post.
Despite the misleadingly similar name, EthereumMax has no legal, business or technical connection to the Ethereum cryptocurrency. One could be forgiven for thinking that they were trying to mislead people into thinking that they are the same – they are not!
In January 2022, Kim Kardashian, boxer Floyd Mayweather Jr, basketball player Paul Pierce and the creators of EthereumMax were sued by investors who alleged that the celebrities collaborated to “misleadingly promote and sell” the cryptocurrency in a “pump and dump” scheme.
In plain terms, EthereumMax’s entire business model relies on using constant marketing and promotional activities, often from ‘trusted’ celebrities, to dupe potential investors into trusting the financial opportunities.
The class action lawsuit filing pointed out that such promotion caused EthereumMax to increase more than 1,300% in value (the pump) before plummeting to “an all-time low” just over a month after Kim Kardashian promoted it.
It alleged that this enabled the defendants to sell EthereumMax tokens for “substantial profits” (the dump) before the inevitable crash in value.
It is unknown how many investors were hurt, but after the initial celebrity-fuelled surge, EthereumMax quickly tanked and never recovered.
This is another lesson in why you should not take investment advice from celebrities, especially when they are only famous for … being infamous?
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Dr. Adrian Wong has been writing about tech and science since 1997, even publishing a book with Prentice Hall called Breaking Through The BIOS Barrier (ISBN 978-0131455368) while in medical school.
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