Kim Kardashian, the reality TV star, paid $1.26 million to settle charges related to her online promotion of the EthereumMax digital token, the U.S. Securities and Exchange Commission said Monday.
Kardashian failed to disclose a $250,000 payment to post on her Instagram account about EMAX tokens, the digital asset associated with EthereumMax (a crypto project unrelated to Ethereum, the second largest crypto token). Instagram influencers often fail to disclose paid posts, but Kardashian ran afoul of federal securities laws that explicitly require celebrities or others to disclose details about compensation they receive from such promotions.
In addition to the charges, SEC Chairman Gary Gensler posted a video with guidelines on how to avoid crypto scams, questionable promotions and report fraud:
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Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.October 3, 2022
Steer Clear of Celebrity Endorsements
It's not the first time a famous face has been used to shill for a crypto project. Everyone from Matt Damon to Steph Curry have endorsed projects. But EthereumMax appears to have drawn additional scrutiny. In addition to the SEC action, a class action suit filed in California federal court alleges Kardashian, boxer Floyd Mayweather, Jr., and former NBA player Paul Pierce of making misleading and false statements in promoting EthereumMax
Celebrity-endorsed crypto scams are a real problem. In June, investment bank Santander reported cases of crypto scams in the UK had surged 61% year-over-year, and the average value of a scam increased 65%, an indication that scammers had become more successful in terms of both the number of crimes committed, and an ability to steal more cash from victims.
How to Report Crypto Fraud
In addition to taking steps to protect your digital currency, the FTC offers these resources to file crypto-related fraud complaints:
- the FTC at ReportFraud.ftc.gov
- the Commodity Futures Trading Commission (CFTC) at CFTC.gov/complaint
- the U.S. Securities and Exchange Commission (SEC) at sec.gov/tcr
- the Internet Crime Complaint Center (IC3) at ic3.gov/Home/FileComplaint
- the cryptocurrency exchange company you used to send the money
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