Kim Kardashian Pays Million Dollar Penalty For Crypto Shilling

Reality star Kim Kardashian has been left with a seven-figure bill and an advertising ban after accepting a ruling on one of her Instagram posts. The Securities and Exchanges Commission (SEC) ruled that the influencer promoted a cryptocurrency on the social media site without disclosing that she had been paid to do so.

Kardashian has agreed to pay out $1.26 million in total; $260,000 of this figure includes the payment she is said to have received to promote the cryptocurrency, along with $10,000 of prejudgment interest. A $1,000,000 penalty has also been issued, and Kardashian has agreed to avoid promoting crypto assets for 36 months. It should also be pointed out that although she has agreed to the terms of the settlement, Kardashian has not admitted or denied any of the SEC's findings.

The celebrity's Instagram page, which has over 330 million followers, has made no mention of the ruling — though the offending post appears to have been removed. Posts containing other endorsements are still up, including ones for Kardashian's own Skkn skincare range of products, though these don't appear to have violated any advertising regulations.

Kardashian allegedly fell foul of the financial regulators after she promoted "EMAX tokens," a crypto-asset, without disclosing that she had been paid to do so. The socialite had been paid $250,000 by a crypto-exchange website called EthereumMax to promote that particular cryptocurrency and drive potential buyers to its website. The SEC claims that the Instagram post that landed Kardashian in hot water contained a link to the EthereumMax website, which then had instructions on purchasing the cryptocurrency. The organization is also hoping the fine will serve as a warning to other public figures who are hoping to profit in a similar manner. Speaking about the ruling, SEC Chair Gary Gensler 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. We encourage investors to consider an investment's potential risks and opportunities in light of their own financial goals. 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." Alongside the ruling, the SEC has released a video warning people about the dangers of making an investment based on a celebrity endorsement.

Several celebrities have made money either by purchasing or endorsing cryptocurrencies and other digital assets like NFTs. Anti-touting laws like the ones Kim Kardashian appears to have violated exist to protect potential investors and stop individuals from promoting something as an investment opportunity without disclosing if they have been paid to do so. While the SEC is free to prosecute violations of its regulations, crypto-endorsing celebrities are open to private legal action.

Tesla owner and the world's richest man, Elon Musk, has also caused controversy by endorsing cryptocurrencies. The billionaire has heavily backed meme-currency Dogecoin, though he hasn't violated any SEC regulations in doing so. Musk almost certainly wasn't paid to endorse the inherently valueless digital currency, and was almost certainly hyping it up as a joke. Musk's backing of Dogecoin included posting a number of memes on his official Twitter account, proposing a Doge-based space mission, and adding a section to the Tesla store which allowed customers to buy various items with the cryptocurrency.

Despite wanting to take the cryptocurrency "to the moon," there really isn't much long-term hope for Dogecoin. Unlike cryptos like Bitcoin, which have a cap on the number of units of currency that can exist, the number of potential dogecoins is limitless. Despite the limitations of Dogecoin being obvious to anyone with more than an eggcup's worth of functional gray matter, some people claim they took Musk's endorsement of the currency seriously. This has led to yet another lawsuit for the SpaceX founder.

Earlier this year, a man called Keith Johnson filed a suit in Manhattan's federal court, describing Musk's endorsement of the cryptocurrency as a "pyramid scheme" and demanding a $258 billion payout — which was more than Musk's net worth at the time. Johnson alleges Musk knew that Dogecoin had no value and aimed to profit from its trading. Musk is also alleged to have gained "exposure" and "amusement" from his promotion of Dogecoin. The crypto-based lawsuit is one of several Musk has faced over the years, and one of a number of ongoing cases. Even if Musk's legal team does its job, Musk's antics could still arguably cost him a lot of money.