High-profile influencer and star of the reality TV show ‘Keeping Up With The Kardashians’, Kim Kardashian, has paid a total of US$1.26 million to settle charges brought against her by the US Securities and Exchange Commission (SEC) relating to her promotion of the cryptocurrency EthereumMax (EMAX) in 2021.
The SEC filed the charges against Kardashian for failing to disclose that she received a US$250,000 payment to promote EthereumMax to her social media followers.
Kardashian’s Promotion Biased, Banned From Promoting Crypto
The Instagram post from Kardashian that attracted the charges contained a link to the EthereumMax website and provided instructions to buy EMAX tokens, the cryptocurrency sold by EthereumMax.
Kardashian’s post was part of EthereumMax’s aggressive 2021 marketing push which saw numerous other celebrities, including boxer Floyd Mayweather Jr. and former basketball player Paul Pierce, endorse the cryptocurrency on social media.
According to the SEC, Kardashian’s failure to disclose the payment she received for her part in the promotion was a breach of the anti-touting provisions of US federal securities laws, which are intended to protect consumers from biased and self-interested promotion of securities. Speaking about the case, SEC Chair Gary Gensler said:
“The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion…Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
SEC Chair Gary Gensler
As part of her settlement, Kardashian also agreed to cooperate with the SEC’s ongoing investigation into EthereumMax and to refrain from promoting any cryptocurrencies for three years.
What Is EthereumMax?
Despite having ‘Ethereum’ in its name, EthereumMax’s EMAX tokens aren’t related to Ethereum’s native ETH cryptocurrency. Rather EthereumMax is simply an ERC-20 token built on top of the Ethereum blockchain. It has a total supply of 2,000,000,000,000,000 — that’s right, two quadrillion tokens — and an unknown current circulating supply.
EthereumMax’s founders claim it’s a “progressive coin” that provides “lifestyle perks and financial rewards” to holders. However, it’s unclear exactly what these perks and rewards are.
At the time of writing, EMAX is down over 98 percent from its all time high, which it hit on May 31, 2021, on the back of its aggressive celebrity endorsement drive.
SEC Charges Follow Investor Lawsuit
Kardashian’s charges aren’t the first legal stoush related to EthereumMax — in January 2022 a lawsuit filed in the US District Court of California’s Central District alleged the founders of EthereumMax, Steve Gentile and Giovanni Perone, and their celebrity spruikers were effectively running a pump and dump scheme.
The complainant claims that while the celebrities pumped the price by promoting the cryptocurrency to their followers, they, along with the founders, were already dumping their EMAX tokens for a significant profit, while their followers were left holding the bag.