The U.S. Securities and Exchange Commission (SEC) has accused model and actress Kim Kardashian of unlawful promotion of the EthereumMax altcoin (EMAX).
According to the agency, the celebrity did not disclose that she received $250 000 for Instagram posts about security tokens offered by EthereumMax. Kardashian’s post contained a link to the project’s site, where potential investors received instructions on buying EMAX.
In doing so, she violated the federal Securities Act’s prohibition on advertising without disclosure of the nature, source, and amount of compensation received in exchange for promotion.
“Investors have the right to know whether a promotion of a security is objective,” the SEC said.
Kardashian will pay $1.26 million in fines, interest and disgorgement of ill-gotten gains. She also agreed not to promote any digital assets for three years.
“This case reminds us that celebrity-endorsed investment opportunities do not necessarily suit all investors,” said Gensler.
The EthereumMax has become widely known in the spring of 2021. On May 26, a promotional post on Twitter by former NBA star Paul Pierce appeared. In the days that followed, the price of EMAX reached a peak, after which it fell more than 80% in 11 days.
In January 2022, a lawsuit was filed in the U.S. District Court for the Central District of California against Kardashian, former boxing star Floyd Mayweather and eight others. Investors accused them of conspiring with project leaders Steve Gentile and Giovanni Perone to mislead about control of the majority of tokens.
In August, lawyers attempted to dispute the class-action lawsuit against Kardashian for promoting EthereumMax. The defense argued that there was insufficient proof that her Instagram posts alone spurred investors to invest in the token.
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