SEC fined Kim Kardashian $1.26m over the crypto pump-and-dump scheme

The Securities and Exchange Commission (SEC) accused reality TV star Kim Kardashian of not disclosing a $250,000 payment received for promoting the EthereumMax digital token on her Instagram post. He also provided a link to the EthereumMax website on the post that directed potential buyers to purchase EMAX crypto tokens.

In violating the anti-touting provision of the federal securities laws, the SEC fined him $1.26 million plus the $260,000 she received for the post and a $1,000,000 penalty plus prejudgment interest. He also agreed to cooperate with further investigations and will stay away from promoting crypto-asset securities for three years.

Ms. Kardashian is pleased to have resolved this issue with the SEC,” her lawyer said to BBC News.

He added that she wanted to put the matter behind her to avoid a protracted controversy. The agreement she entered into with the SEC allows her to do this so that he can continue with his many different business activities.

Investors sued Ms. Kardashian, boxer Floyd Mayweather Jr, basketball player Paul Pierce and the creators of EthereumMax in January.

They were accused of working together to “falsely advertise and sell” the cryptocurrency in a “pump and dump” aimed to inflate the price before offering it to traders. EthereumMax denied the allegations at the time.

Despite its name, EthereumMax has nothing to do with the Ethereum blockchain.

Kardashian’s matter is a “reminder” that when celebrities or sponsors endorse investment opportunities along with crypto-asset securities, it doesn’t imply that these are beneficial for all investors, SEC Chair Gary Gensler said in a tweet.

He added:

We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.

He released a YouTube video warning traders not to base investment decisions just on the recommendation of an influencer or celebrity.

SEC’s Enforcement director Gurbir S. Grewal said, “Securities regulations make it clear that celebrities and other individuals who advertise cryptocurrency must reveal the source, nature, and amount of compensation they received to get promoted.

Moreover, despite its name, EthereumMax is not affiliated with the cryptocurrency Ethereum in any way, either legally or commercially.

At first, it appeared like EthereumMax’s massive investment in snagging celebrities like Kim Kardashian was paying off.