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Despite paying the SEC $1.26 million for an undisclosed Instagram ad, Kim Kardashian’s hefty fine is nothing compared to the impacts on those she scammed.
Kim Kardashian has been forced to pay $1.2 million to the Securities and Exchange Commission for an undisclosed promotion of EMAX tokens, a crypto asset by EthereumMax.
While the name might sound familiar, the asset Kardashian promoted on her Instagram stories is not the second largest cryptocurrency on the market, Ethereum, but a token derived from it.
That token is now trading at £0.0000000044.
Celebrities endorsements of crypto are nothing new. Neither are their promotions of financially dubious product. But Wall Street regulators have placed mounting pressure on individuals to disclose their payment for such endorsements.
In 2018, boxer Floyd Mayweather and musician DJ Khaled were both fined for failing to disclose payments for promotion of crypto coins.
Kardashian’s representatives say she has been cooperative since the lawsuit started, and ‘remains willing to do whatever she can to assist the SEC in this matter’.
Despite including the word ‘#AD’ at the very bottom of the post in 2021, the SEC argued that investors were still misled about the nature of the endorsement.
The consequence of Kardashian’s Instagram ad, for which she was paid $250,000 by EMAX, isn’t as simple as a $1.2 million fine. In fact, the true impact of her promotion is hard to measure.
Kardashian’s fine comes after investors sued her in January of this year, claiming the businesswoman had collaborated to ‘misleadingly promote and sell’ EMAX in a ‘pump and dump’ scheme.
‘Pump and dump’ is a market term used to describe the tactic of dramatically inflating the price of an asset before ‘dumping’ and selling to investors. This inflation is often achieved through paid celebrity endorsements. And the bigger their social following, the better.
For Kardashian, who currently has 331 million Instagram followers, the EMAX endorsement may have felt like a drop in the ocean.
Her social media is peppered with gaudy paid ads for gimmicky products; everything from that infamous weight-loss lollipop to luxury handbag giveaways.
The budding lawyer also spoke openly about her payment for these brand deals. A fast fashion company famously offered Kardashian $1 million dollars to pose in their clothes, a deal she turned down at the time.
