Kim Kardashian’s fine for illegally promoting a cryptocurrency product without disclosing she was paid to do so is “virtually meaningless” given her billionaire status, a lawyer has said.
The reality TV star and influencer is worth $1.8 billion, according to Forbes, so her $1.26 million fine won’t make much of a dent in her earnings, or serve as a worthwhile penalty.
On Monday, the Securities and Exchange Commission (SEC) said that it had settled for $1.26 million in a case against the 41-year-old for not disclosing that she had been paid $250,000 to promote a crypto token sold by EthereumMax.
Kardashian settled the charges without admitting to or denying the allegations and will pay $1.26 million in penalties, disgorgement (repayment of profits from illegal transactions) and interest. The Skims shapewear founder has agreed to cooperate with the agency’s ongoing investigation.
On her Instagram account in June 2021, Kardashian promoted the EMAX tokens, sold by EthereumMax, to her 330 million-plus followers for a $250,000 payment.
She included the hashtag #ad with her post, but SEC officials said that is not enough to comply with laws surrounding financial investments and securities.
“Kim Kardashian is now a known touter having settled an SEC charge for violating the anti-touting provisions of federal securities laws,” Andrew M. Lieb, managing partner of Lieb at Law, P.C., with a practice focus on litigation and compliance, told Newsweek.
“All influencers are now on notice of the limits of freedom of speech when it comes to pushing financial investments without disclosing personal interest in the advice.
“In a settlement with the SEC, Kardashian will pay $1.26 million concerning civil charges that she touted the crypto asset, EthereumMax, on Instagram, without disclosing that she was paid a quarter-million dollars to do the plug,” Lieb said, but the attorney questioned whether this penalty with have much impact.
“That said, is being labeled a touter enough of a punishment for her, given that her estimated net worth of $1.8 billion makes this fine virtually meaningless to her in terms of serving as a penalty?”
Newsweek has contacted Kardashian’s representatives for comment.
Lawyer David M. Schwartz from Schwartz Defense said that Kardashian wasn’t aware she was violating any rules with her social-media post.
“Illegally touting a stock or a form of cryptocurrency is a violation of the anti-touting act if the payment to tout that stock is not disclosed,” Schwartz told Newsweek.
“It is both an SEC violation and under certain circumstances can be considered criminal behavior as well,” he said.
“I’m sure Kardashian did not realize she was violating the statute, and that is why all of these types of promotion deals should be reviewed by competent counsel.”
SEC Chair Gary Gensler said in a statement on Monday that Kardashian’s 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.”
Gensler added: “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.”
Kardashian’s lawyer Michael Rhodes said the star was pleased to have resolved the case on Monday.
“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,” Rhodes said in a statement, according to Reuters.
News of the SEC fine and settlement comes following Kardashian’s September announcement that she launched a new private equity firm focused on investing in consumer and media businesses.