Kim Kardashian has paid US regulators more than $1m to settle charges for failing to disclose that she was paid to promote a crypto asset in a post on her Instagram page.
The reality TV star, social media influencer and entrepreneur, who is estimated to be worth $1.8bn (£1.6bn), has agreed to pay the Securities and Exchange Commission (SEC) $1.26m to settle the charges.
She was paid $250,000 to post about crypto security tokens sold by EthereumMax on her Instagram account in June last year. Kardashian asked her then 220 million Instagram followers: “Are you guys into crypto????”
The post, which featured the hashtag “#ad”, included a link to the EthereumMax website, which gives users instructions about how to buy the tokens.
Kardashian’s failure to disclose the payment was a violation of federal securities laws, the SEC said.
“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,” said Gary Gensler, the chair of the SEC.
Kardashian, who now has more than 330 million Instagram followers, has agreed not to promote crypto assets for three years and will cooperate with the SEC’s investigation. However, she has neither admitted to nor denied the regulator’s findings.
A lawyer representing her said: “Kardashian fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the SEC in this matter.
“She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.”
Last year, Charles Randell, then the chair of the UK’s Financial Conduct Authority, criticised Kardashian in a speech after she posted the promotion for EthereumMax.
UK regulators have also moved to crack down on the marketing and promotion of cryptocurrencies to members of the general public who for the most part are unaware of the volatility and risks of making such investments.
In December, the UK advertising regulator banned two promotions for “fan tokens” from Arsenal Football Club, saying they misled supporters over the risks of investing in cryptocurrencies.
The Advertising Standards Authority said that the Premier League club took “advantage of consumers’ inexperience or credulity, trivialising investment in crypto assets, misleading consumers over the risk of investment and not making it clear the ‘token’ was a crypto asset”.
The ASA also previously banned a campaign for a cryptocurrency firm for telling the public “it’s time to buy” bitcoin.
In January, the Treasury announced plans to crack down on misleading cryptocurrency ads by making them subject to the same regulations as marketing for other financial products such as shares and insurance.
