On Monday, October 3, the SEC published a press release announcing details of its recent charges against Kim Kardashian for a series of promotions the celebrity posted to her Instagram account in June 2021.
The SEC charges come, not because of the promotions themselves, but because the globally-recognized member of the Kardashians was paid $250,000 for the promotion, which she didn’t disclose in her messaging.
Details Into The SEC Charges Against Kim Kardashian
Specifically, Kim Kardashian was charged with violating the anti-touting provision of the federal securities laws. As a result of the charges, she agreed to pay $1.26 million to settle the matter. $260,000, which includes the amount paid to the celebrity, accounts for total disgorgement, and $1 million is the amount of the penalty assessed for the violation. The nature of this settlement avoids admittance or acknowledgement of wrongdoing, which could play part in other unsettled legal proceedings involving EMAX promotions.
The SEC made it clear in its press release and in prior statements, that celebrities, athletes and influencers have a strict code to follow, especially in the case of promoting cryptocurrency security assets, which EMAX has been classified as by the SEC.
Additional EthereumMax Legal Proceedings In The Works
In June, Kim Kardashian was not the only celebrity to promote the EMAX token. She and former world-renowned boxing champion and fellow celebrity, Floyd Mayweather Jr., are both named in a class action lawsuit. The class action suit claims that the two celebrities gave “false and misleading statements” to influence investors’ decisions for personal gain.
The class action suit was filed earlier this year in January, at a point when the EMAX token price was reportedly down 97% from its highest price point in June, at the time of the promotions. The numbers and poor performance led many to believe that the EthereumMax project could have even been a planned pump and dump scheme. Floyd Mayweather Jr. also allegedly promoted the token and reportedly accepted EMAX for payment at his promo boxing match against YouTuber Logan Paul in 2021. No rulings or decisions have been made yet in the class action suit.
The SEC Stance Being Made Clear With Crypto Promotions
Securities and Exchange Committee Chairman Gary Gensler explained different things individuals should be aware of whenever considering any product or service that is being promoted by a celebrity in an SEC YouTube video also released on October 3. Throughout the latest video, part of a segment entitled “Office Hours with Gary Gensler”, the chairman highlights the importance for members of the public to research and understand cryptocurrency promotion in particular.
In the published video, Mr. Gensler points out that many celebrities and athletes do not share the same goals often, mostly since celebrities are often paid for their endorsements and not for the performance of the product or service. He mentions that crypto can be highly speculative, and even potentially a scam in some cases. The SEC chair then finishes the two-minute and five-second video by highlighting the government website – investor.gov, as an active resource for individuals who may want to perform research related to investing.