We’re all familiar with the sneaky little #ad that often finds its way into the post captions of some of the most followed Instagram influencers. Whether it’s longwinded captions that wax lyrical about the many benefits of a tea that helps you get better hair and grades or a new piece of tech that you absolutely cannot do without, Instagram influencers are the best way to peddle goods now, especially because they come with a legion of loyal followers.
The biggest Instagram influencer of all Kim Kardashian is also not exempt from the (very) frequent #ad post where she would sell everything from problematic appetite-killing lollipops to hair gummies. But one of her seemingly innocuous posts about the benefits of investing in a crypto scheme has landed her in hot water.
The Securities and Exchange Commission (SEC), the top financial regulator in the US, has levied a civil charge against Kardashian for flouting their anti-touting provisions and hiding the fact that she got paid a hefty bag for the post.
Last year, the reality superstar was paid $250,000 for an Instagram post to promote cryptocurrency by EthereumMax called EMAX tokens. Kardashian came through and created the post with the caption, “Are you guys into crypto? This is not financial advice but sharing what my friends told me about the ethereum max token!”
Naturally, her over-300 million followers listened and the price quickly shot up. The SEC also took note of the post and realised that it flouted the rules set to regulate paid promotions of securities offerings. The official charges reveal that she “provided instructions for potential investors to purchase EMAX tokens” which is a direct violation of the provision.
According to a statement released by the SEC, Kardashian has agreed to pay a million-dollar fine, in a settlement that also includes her returning the $250,000 she got for the post along with interest, without admitting or denying the charges.
SEC Chair Gary Gensler took to Twitter to share the news and warn people of being wary of celebrity #ads on Instagram.
Today @SECGov, we charged Kim Kardashian for unlawfully touting a crypto security.— Gary Gensler (@GaryGensler) October 3, 2022
This case is a reminder that, when celebrities / influencers endorse investment opps, including crypto asset securities, it doesn’t mean those investment products are right for all investors.
“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,” he said.
Along with the fine, Kardashian has also agreed to not promote any crypto asset securities for the next three years.