The top U.S. financial regulator has charged celebrity Kim Kardashian for touting a cryptocurrency on her Instagram account without disclosing that she was paid for the promotion.
The Securities and Exchange Commission said Monday Kardashian has agreed to pay a fine of $1 million, although she did not admit or deny the S.E.C.'s findings. She will also give back $260,000, which includes her payment from the company with 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.
Kardashian, who has around 330 million Instagram followers, was paid $250,000 to promote cryptocurrency offered by EthereumMax called EMAX tokens.
According to regulators, her post also "provided instructions for potential investors to purchase EMAX tokens." And that violates an "anti-touting provision" in the federal securities laws.
As the popularity of crypto has ballooned, companies have spent millions of dollars on marketing. Many of them have hired celebrities spokespersons, including comedian Larry David and actor Matt Damon, to promote their products. But after the value of Bitcoin and other digital currencies plummeted, many of them have been criticized for boosting them.
As more and more celebrities promote products online, regulators have started to take a closer look to make sure that they're following rules.
The Federal Trade Commission, for instance, has cracked down on celebrities and social media influencers who don't adequately disclose their connections or that they are paid by the products they promote.
Two years ago, the FTC fired off warning letters to several Internet influencers and celebrities, like the recording artists Cardi B and Jordin Sparks, reminding them of their legal obligation to disclose their connections to the products they promote.
While Kardashian didn't admit or deny the SEC's findings, in an agreement with the regulator, she agreed to not promote any crypto asset securities for three years.
NPR has reached out to Kardashian for comment.
