The United States Securities and Exchange Commission (SEC) has fined renowned celebrity Kim Kardashian $1.26 million for backing EthereumMax crypto (EMax). According to the SEC statement, the reality television star was charged for promoting the EthereumMax digital token and failing to disclose the necessary information.
On Monday, October 3, the SEC filed charges against the “Keeping Up With the Kardashians” star, citing her failure to disclose payments received. SEC Chairman Gary Gensler announced:
“Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.”
It follows that Kim Kardashian posted content promoting the EthereumMax digital token and was paid $250,000 for it. The official press release from the SEC notes that consequent to the charges, Kardashian consented not to promote any cryptocurrencies for the next three years.
Although Kardashian has a huge Instagram following (331 million) with whom she shared promotional content advertising EthereumMax, she is not the first to promote the project. Floyd Mayweather Jr., a professional boxer, also announced the digital token last year.
According to BBC News, EthereumMax investors sued the two celebrities in January, alongside basketball player Paul Pierce and the currencies’ creators. January 12, 2022, legal action alleged that the celebrities collaborated with EthereumMax developers to “misleadingly promote and sell” the EMax cryptocurrency.
Kardashian had stated feeling the regulatory pressure over her involvement in promoting EthereumMax when in June last year, she said:
Investors sued Kardashian alongside former NBA star Pail Piece and superstar boxer Floyd Mayweather Jr. in January, who accused them of artificially inflating the token’s value.
The case was filed in the Central District Court of California with the plaintiffs alleging that EthereumMax operated a “pump and dump” scheme using misleading marketing strategies to inflate the digital token’s price before selling it to unknowing investors for profit. Allegedly, the defendants “touted” investors’ ability to make massive returns. This caused an artificial rise in EthereumMax prices and enticed investors to buy the token. The investors ended up losing investments at inflated prices. Consequently, the project’s executive staff could sell their EMax tokens to the duped investors at a profit.
During the January case, the court observed that the whole business model upon which EthereumMax runs is the use of “constant marketing and promotional activities often from ‘trusted’ celebrities, to cheat potential investors into trusting the financial opportunities.” EthereumMax denied the claims, expressing anticipation for the truth to come out.
Speaking of the charges brought against Kardashian, the SEC Chairman said in a Tweet:
“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it doesn’t mean that those investment products are right for all investors.”
Celebrities are famous among crypto projects because of their large social media following. Kim Kardashian commands up to 331 million Instagram followers and 74 million others on Twitter. EthereumMax is unrelated to the Ethereum crypto or blockchain, despite the name.