Kim Kardashian

SEC Chair Gary Gensler cited U.S. law that stipulates that people who tout a certain stock or crypto security, they need to disclose not only that they are getting paid, but also the amount, the source and the nature of those payments

Kim Kardashian has agreed to settle charges of unlawfully touting a crypto security and to pay $1.26 million in penalties, disgorgement and interest, the U.S. Securities and Exchange Commission said on Monday.

The SEC said in a statement that reality television star and influencer Kardashian failed to disclose that she was paid $250,000 to publish the post about EMAX tokens, the crypto asset security being offered by EthereumMax on her Instagram account.

SEC Chair Gary Gensler cited U.S. law that stipulates that people who tout a certain stock or crypto security, they need to disclose not only that they are getting paid, but also the amount, the source and the nature of those payments.

“This was really to protect the investing public when somebody is touting that stock and whether that’s a celebrity or an influencer or the light, and that’s at the core of what this isn’t,” Gensler said in an interview with CNBC.

Kardashian, whose post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens, has agreed to pay the charge levied without admitting or denying the SEC’s findings.

“I want to acknowledge Miss Kardashian cooperating and ongoing cooperation. We really appreciate that. But in this particular case, this was about an influencer, a high-profile celebrity on their Instagram site, putting out a towel for this token,” Gensler added.

The regulation of the cryptocurrency markets has been high on the securities regulator’s agenda this year, as prices of digital assets suffer wild swings due to heightened recession fears, rising interest rates and geopolitical turmoil. The U.S. regulator also charged Boxer Floyd Mayweather Jr. and a music producer known as “DJ Khaled” in November 2018 for allegedly not disclosing payments they received for promoting investments in initial coin offerings.

Neither Mayweather nor Khaled Mohamed Khaled admitted or denied the SEC’s charges, but agreed to pay a combined $767,500 in fines and penalties. Last month, Kardashian, who has expanded her footprint in the world of finance, launched a new private equity firm focused on investing in consumer and media businesses.