SEC judges Kim Kardashian for supporting EMAX, orders her to pay $1.26 million

The U.S. Securities and Exchange Commission (SEC) said Monday that it has charged celebrity Kim Kardashian for illegally endorsing a crypto asset security by EthereumMax. The SEC’s order states that Kim Kardashian failed to disclose that she was paid $250,000 to publish a post about EMAX tokens on her Instagram account.

Kim Kardashian indicted by the SEC

According to an October 3 press release, the Securities and Exchange Commission has indicted Kim Kardashian for illegally promoting EMAX tokens by EthereumMax on her Instagram account. The SEC charges. Kim Kardashian for not disclosing the $250,000 she received to publish a post on her Instagram account.

The post contained a link to the EthereumMax website, which offers instructions for potential investors to buy EMAX tokens.

SEC Chairman Gary Gensler said:

“This case is a reminder that when celebrities or influencers endorse investment opportunities, including crypto asset securities, it does not mean that these investment products are suitable for all investors. We encourage investors to consider the potential risks and opportunities of an investment in light of their own financial goals.”

Kim Kardashian agrees to settle the charges for $1.26 million in penalties, disgorgement and interest. She will also cooperate with the SEC’s ongoing investigation. This includes $260,000 in disgorgement and prejudgment interest, and $1 million in penalties. In addition, Kim Kardashian will not promote crypto assets for three years.

Securities laws recommend that celebrities or others disclose the nature, source, and amount of compensation when promoting a cryptoasset security. This helps investors make the required financial decision and prevents them from unknowingly investing in any risky asset.

Gary Gensler’s position against crypto-currencies

Gary Gensler, chairman of the SEC, considers all crypto-currencies, except Bitcoin and Ethereum, as securities. He has agreed that Bitcoin and Ethereum should be regulated by the CFTC. However, Gensler changed his position again, calling Ethereum “security” due to the transition to proof of stake. He believes that proof-of-stake based crypto-currencies are securities under the Howey test.

CFTC Commissioner Christy Romero says the CFTC still considers Ethereum a commodity, even with the PoS transition. In addition, CFTC Chairman Rostin Behnam has asked the U.S. Congress for authority to oversee the cash markets and resolve the conflict of interest.