Keeping up with Cryptocurrency: Why Kim Kardashian is paying $1.26 million to US authorities

Kim Kardashian has agreed to pay a $1.26 million fine after being charged with illegally promoting a crypto scheme on Instagram. The US Securities and Exchange Commission (SEC) made the announcement Monday that the US reality star agreed to pay the amount after pushing a cryptocurrency on Instagram without revealing that she was paid to do so. The SEC Kardashian was accused of failing to disclose that she was paid $250,000 to post about EMAX tokens, the crypto asset security being offered by EthereumMax. Let’s take a closer look at the case: What happened? Last June, Kardashian, who has 331 million followers on Instagram – making her one of the top ten most followed people on the global social network – in a series of posts on the social media website told her followers: “Are you guys into crypto??? This is not financial advice but sharing what my friends just told me about the ethereum max token!” Kardashian’s followers were then told to head to the EthereumMax website and “join the E-Max community.” As per The Ascent, EthereumMax called itself a “culture token” that would give holders access to concerts and sporting events but it was not listed on any major cryptocurrency exchange. By January, EthereumMax, which has no connection with the Ethereum cryptocurrency, lost 97 per cent of its value compared to its June high, as per The Verge. It was then that investors sued Kardashian, boxer Floyd Mayweather Jr, basketball player Paul Pierce and EthereumMax’s creators, as per the BBC. The lawsuit alleged Kardashian, Mayweather et all had collaborated to “misleadingly promote and sell” the cryptocurrency in a “pump and dump” scheme designed to inflate the price before selling to investors, as per the report. EthereumMax at the time denied all the allegations. That class action lawsuit is still pending. Kardashian agrees to fine, not to promote crypto for three years Kardashian has agreed to pay the charge levied without admitting any guilt her lawyers said. The fine includes a penalty of $1 million plus $260,000, representing the amount Kardashian received for promoting the crypto plus interest, the SEC said in a statement. [caption id=“attachment_3764357” align=“alignnone” width=“3410”] A sign for the Securities and Exchange Commission (SEC) is pictured in the foyer of the Fort Worth Regional Office in Fort Worth, Texas. Reuters[/caption]

Kardashian also agreed not to promote any crypto asset securities for three years.

Though the post used the #ad, the SEC said her failure to disclose the payment violated federal laws. She has also agreed to cooperate with its ongoing investigation, as per Business Today. While Kardashian is well known for reality tv, currently appearing on “The Kardashians" on Hulu, she is also a successful businesswoman. She shot to fame with the US reality show “Keeping Up With the Kardashians,” which tracked the lives of her family members in Los Angeles. The 41-year-old has steadily built her business empire in recent years – most visibly with her apparel and beauty brands – and has a net worth of $1.8 billion, according to Forbes.

Her brands include SKIMS, which has shapewear, loungewear and other products, and a skincare line called SKKN. “This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” said SEC Chair Gary Gensler in the statement.

“We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals.” Under US law, people who tout a certain stock or crypto security need to disclose not only that they are getting paid, but also the amount, the source and the nature of those payments, Gensler added. “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 like, and that’s at the core of what this is about,” Gensler told CNBC. “I want to acknowledge Miss Kardashian cooperating and ongoing cooperation. We really appreciate that,” Gensler added. Kardashian is pleased to have resolved the case and fully cooperated with the SEC, her lawyer Michael Rhodes said. “She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits,” Rhodes said in a statement. SEC enforcement director Gurbir S Grewal in a press statement said the required disclosure should have been clear. “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,” said Grewal. “Investors are entitled to know whether the publicity of a security is unbiased, and Kardashian failed to disclose this information.”

Kardashian isn’t alone.

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Other celebrities have been nabbed in the past by US authorities for illegally promoting cryptocurrencies include Mayweather, DJ Khaled, actor Steven Seagal and rapper TI. [caption id=“attachment_8437631” align=“alignnone” width=“640”] File image of Floyd Mayweather. AP[/caption] 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, as per Reuters. Gensler in July told CNBC the SEC is working to get some cryptolending companies properly registered if they operate more as investment firms. He added that it was up to large financial institutions to decide whether they want to include crypto options in their portfolios for clients, but that the risks of crypto tokens need to be made public. “We have focused on this area because many of these firms…may well be investment companies taking hundreds of thousands or millions of customers funds, pulling it together, and then relending it while offering pretty high returns. Sounds a little like an investment company, or a bank, you might say,” Gensler said. “How are they doing that? What stands behind those promises? We’re going to work with the industry to get these firms properly registered under the securities laws.” Cryptocurrency companies have said they remain unsure of US regulations governing products that allow customers to earn interest on holdings instead of trading them. read more Focus on crypto markets has intensified again since May amid recent spells of volatility that has long-alarmed watchdogs. Several crypto lenders have stumbled amid slumping crypto prices. Celsius Networks has filed for bankruptcy. BlockFi signed a deal with FTX that gives the crypto exchange the option to buy BlockFi for up to $240 million. Companies exposed to cryptocurrencies have previously warned that declines in token prices could have ripple effects, including by triggering margin calls. Meanwhile, as the US Federal Reserve has begun hiking rates to combat inflation, investors have fled crypto markets. With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.