In order to resolve allegations made by the US Securities and Exchange Commission regarding a post on Kim Kardashian’s Instagram account, she has agreed to pay $1.26 million (£1.12 million).
According to the SEC, the reality TV actress did not declare she received $250,000 (£220,000) for endorsing a bitcoin asset on her feed.
The commission said the post was touting EMAX tokens, the asset security being offered by EthereumMax, and she was paid by EthereumMax, through an intermediary, but did not reveal the payment.
In June last year, Kardashian posted to her 331 million followers writing: “ARE YOU INTO CRYPTO??? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN.”
Her Instagram post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
Under US law, people who tout a certain stock or crypto security need to reveal not only that they are getting paid, but also the amount, the source, and the nature of those payments, SEC chair Gary Gensler said.
He also said the Kardashian case was “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”.
Lawyers for Kardashian released a statement saying she was pleased to have resolved the matter.
“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,” the statement read.
“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.”
Failing to disclose payment for promoting securities is a violation of federal law. The $1.26m (£1.12m) she paid includes her fee for the promotion, the interest and the $1m penalty.
The reality TV star isn’t the only celebrity to have been charged by the SEC over crypto promotions.
Boxer Floyd Mayweather Jr and music producer DJ Khaled were both charged in 2018 for allegedly not disclosing payments they received for promoting crypto coins.
Neither Mayweather nor DJ Khaled admitted or denied the charges but agreed to pay a combined $767,500 (£682,700) in fines and penalties.