The famous reality TV star Kim Kardashian has been fined a whopping $1.26m for advertising EMAX tokens, offered and sold by EthereumMax, on her Instagram page last year. The US Securities and Exchange Commission (SEC) said that along with the fine, Kardashian would also have to return the $250,000, with interest, which she received to put out a post about cryptocurrency. She also cannot promote any crypto asset securities for three years.
The US SEC stated Kardashian failed to disclose the payment she charged for the post which makes the advertisement unlawful because as per federal laws, any celebrity or influencer who promotes a crypto asset security must disclose the nature, source, and amount of compensation received in exchange for the promotion.
In her post, Kardashian wrote, “Are you guys into crypto????” further adding “Sharing what my friends just told me about the EthereumMax token!” with ‘#ad’ to show it was a paid advertisement along with a link to the EthereumMax website.
While speaking to BBC, Kardashian’s lawyer said, “Ms. Kim Kardashian is pleased to have resolved this matter with the SEC” further adding, “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 lawyer added, “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.”
In January this year, investors sued Kim Kardashian, boxer Floyd Mayweather Jr, basketball player Paul Pierce, and EthereumMax’s creators, alleging they all had collaborated to “misleadingly promote and sell” the cryptocurrency in a “pump and dump” scheme designed to inflate the price before selling to investors. The lawsuit states promotions like these caused the currency to increase in value to over 1,300 per cent more than its initial price, before falling to “an all-time low” around a month after Kardashian’s post, a BBC report said.
The Advertising Standards Council of India, in February this year, also framed guidelines to promote virtual digital assets (VDA) which state that all ads for VDA products and exchanges must carry, in a prominent and unmissable manner, the disclaimer that “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.”