The SEC’s order finds that Kardashian violated the anti-touting provision of the federal securities laws. Without admitting or denying the SEC’s findings, Kardashian agreed to pay the fine, including approximately $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest, and a $1,000,000 penalty. Kardashian also agreed to not promote any crypto asset securities for three years.
Celebrity sway
In a speech last year, Charles Randell, the former chair of the UK’s Financial Conduct Authority (FCA), suggested that Kardashian’s post “may have been the financial promotion with the single biggest audience reach in history”.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says the reprimand is a ‘stark celebrity warning’.
“The $1.26million pound fine levied on Kim Kardashian for promoting Ethereum Max is a stark warning to other celebrities not to dabble in the dark world of crypto to make a quick buck. This is a severe dressing down both financially and in terms of reputation for the Queen of reality TV who has agreed not to promote any crypto asset securities for three years.
“Regulators are clearly horrified at the damage superstar celebrities can do to the bank balances of vulnerable consumers, who are influenced by almost every move they make. The delusions of quick riches can spread far too rapidly on social media with speculation amplified by reposts by millions of followers.
“The FCA has repeatedly warned that investing in crypto currencies is extremely high risk and that speculators risk losing all their money if they indulge in trading on platforms which are largely unregulated. It’s worried that too many financially vulnerable people are being lured into ‘get rich quick’ schemes, with 14 per cent getting into debt during the pandemic to speculate in crypto assets.”
According to Streeter, Ethereum Max has ‘plummeted like a stone’ from an all-time high of $5.80 to be ‘almost worthless’ given that it’s now trading at $0.000000004312.