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The U.S. Securities and Exchange Commission on Monday said it has charged celebrity Kim Kardashian for unlawfully endorsing a crypto asset security by EthereumMax. The SEC order stated Kim Kardashian fails to disclose that she was paid $250,000 to publish a post about EMAX tokens on her Instagram account.
Kim Kardashian Indicted by the SEC
According to a press release on October 3, the Securities and Exchange Commission charged Kim Kardashian for unlawfully promoting EMAX tokens by EthereumMax on her Instagram account. The SEC alleges Kim Kardashian for not disclosing the $250,000 she received to post publish a post on her Instagram account.
The post contained a link to the EthereumMax website, which offers instructions for potential investors to purchase EMAX tokens.
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.”
Kim Kardashian agrees to settle the charges for $1.26 million in penalties, disgorgement, and interest. She will also cooperate with the ongoing investigation of the SEC. This includes $260,000 in disgorgement and prejudgment interest, as well as $1 million in penalty. Moreover, Kim Kardashian will not promote any crypto asset securities for three years.
The securities laws recommend celebrities or other individuals to disclose the nature, source, and amount of compensation while promoting a crypto asset security. It helps investors to make the required financial decision and prevent them from unknowingly investing in any risky assets.
Gary Gensler’s Stance Against Crypto
SEC Chair Gary Gensler considers all cryptocurrencies, except Bitcoin and Ethereum, as securities. He accepted that Bitcoin and Ethereum should be regulated under the CFTC. However, Gensler again changed his stance by calling Ethereum a “security” due to the proof-of-stake transition. He believes PoS-based cryptocurrencies are securities under the Howey Test.
CFTC Commissioner Christy Romero claims the CFTC still considers Ethereum a commodity even with the PoS transition. Moreover, CFTC Chair Rostin Behnam has been asking the U.S. Congress for the authority to oversee cash markets and resolve the conflict of interests.
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