The SEC hopes the case will serve as a warning to other celebrities who encourage people to invest in cryptocurrencies without disclosing their compensation.
Kim Kardashian has agreed to pay $1.26 million to settle charges after failing to disclose how much she was paid to endorse a cryptocurrency on Instagram.
The US Securities and Exchange Commission announced in a press release Monday that it had charged Kardashian for touting EthereumMax to her social media followers without saying she had been paid to do so. The reality star received $250,000 for the ad, which she has agreed to repay as part of the $1.26 million settlement.
In the ad, Kardashian posted a link to the EthereumMax website, along with the caption: "ARE YOU INTO CRYPTO??? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN."
Cryptocurrencies have often been touted as a get-rich-quick scheme, but investing in them involves huge financial risk. SEC rules mean that anyone promoting cryptocurrency in exchange for payment must be clear about how much money they receive to do so. When Kardashian posted about EthereumMax on Instagram she did mark it as an ad but did not disclose how much she was paid.
As well as agreeing to the fine, she has agreed not to promote any crypto asset securities for three years.
"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," SEC Chair Gary Gensler said in a statement. "We encourage investors to consider an investment's potential risks and opportunities in light of their own financial goals."
As part of the agreement, Kardashian did not admit to or deny the charges, the SEC said.
Representatives for Kardashian didn't immediately respond to a request for comment.