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Kim Kardashian found herself in hot waters after the top U.S. financial regulator, the Securities and Exchange Commission (S.E.C), charged her for attempting to sell cryptocurrency on her Instagram account without disclosing that she was paid for the promotion.
According to the independent agency of the United States federal government, the reality tv personality and businesswoman agreed to pay a fine of $1 million, even though she kept a neutral position regarding the S.E.C.‘s findings. As an act of good faith, the mom of four will also give back the $250,000 she received as payment from the company, plus $10,000 in interest.
“Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities,” said SEC chair Gary Gensler.
Last year, Kim Kardashian made headlines after promoting EthereumMax, a sketchy company that sold cryptocurrency called EMAX tokens. At the time, Charles Randell, chair of the U.K.’s Financial Conduct Authority, warned social media users of her ad.
According to Randell, Kim’s paid advertisement of Ethereum Max is a “speculative” cryptocurrency. UK’s financial watchdog said in a speech that Kardashian West had asked her more than 250 million Instagram followers to “speculate on crypto tokens by ‘joining the Ethereum Max Community,’” adding that her post “may have been the financial promotion with the single biggest audience reach in history.”
To date, Randell said he is unaware if Ethereum Max is a scam; but he knows how “social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation.”
Two years ago, the Federal Trade Commission sent warning letters to several Internet influencers and celebrities to remind them they need to disclose if they got paid for the products they promote.