From skinny tea to shapewear, Kim Kardashian knows a thing or two about using Instagram for #ads. She and the rest of The Kardashians practically invented it. But, unfortunately, one #ad Kim did on Instagram last summer just got her fined over $1 million. As CNBC reports, the United States Securities and Exchange Commission cracked down on celebs using Instagram to promote cryptocurrency, and Kim has found herself in the middle of it.
“ARE YOU INTO CRYPTO???” Kim asked her 250 million Instagram followers last summer. “THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN,” she continued.
The post included a link to the EthereumMax website, ultimately guiding users toward purchasing the virtual tokens. The #ad landed Kim in hot water for two reasons: Investors sued her and other celebrities that promoted the cryptocurrency for artificially inflating its value. The SEC was concerned about her failure to disclose that she got paid $250,000 to promote the cryptocurrency, violating federal securities law.
As a result of the violation, the SEC asked Kim to pay back the money she earned from the Instagram post, a little bit of interest, and a $1 million fine. The grand total came to $1.26 million—a lot of money to fork up over a botched Instagram ad. Additionally, she’s barred from promoting cryptocurrency for three years, and she’s agreed to cooperate with the SEC’s ongoing investigation.
The chairman of the SEC, Gary Gensler, spoke about the decision to charge Kim over her cryptocurrency promotion. First, he wrote in a news release, “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.”
Later, Gary went on CNBC and elaborated more on the case, saying, “Congress passed a law many decades ago called the Securities Act, and it was to protect the public.” He continued, “Part of that law said that if you tout a stock, you have to disclose if you’re getting paid.”
That seems pretty straightforward, right? However, the SEC also noted that although Kim agreed to pay up, she technically didn’t admit to or deny any wrongdoings. Agreeing to the SEC’s settlement helped her avoid a lengthy legal battle, and Kim’s legal team says she’s just happy to have it behind her.
“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,” a statement from Kim’s lawyers read.
TELL US – WHAT DO YOU THINK ABOUT KIM AGREEING TO SETTLE THESE SEC CHARGES? DO YOU THINK THE SEC IS TRYING TO MAKE AN EXAMPLE OUT OF HER?
[Photo Credit: Rodin Eckenroth/WireImage]
