Jon-Jorge Aras Discusses What Crypto Investors Can Learn From This Case
Kim Kardashian will pay over $1 million to the SEC for unlawfully promoting a crypto asset security offered and sold by EthereumMax without disclosing her payment. The SEC’s order finds that Kardashian failed to disclose to the public that she was paid $250,000 to publish a post on her Instagram account about EMAX tokens, the crypto asset security being offered by EthereumMax. Kardashian’s post contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
By failing to disclose her compensation, Kardashian violated the anti-touting provision of the federal securities laws. Without admitting or denying the SEC’s findings, Kardashian agreed to pay $1.26 million, including approximately $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest and a $1,000,000 penalty. Kardashian also agreed not to promote any crypto asset securities for three years.
Jon-Jorge Aras, Chair of the Warren Law Group’s Securities Litigation Practice, notes that “even though Kardashian disclosed in her social media post that she was promoting an advertisement for EthereumMax, the SEC has clearly signaled a more detailed disclosure is required. Given the growth of crypto and celebrity involvement in promoting these investment opportunities, I would not be surprised to see more enforcement actions. The SEC is applying the same regulations to the crypto market as it does to traditional securities.”
If you are involved in crypto, it is critical that you engage counsel to advise on the implications and application of the federal securities laws. Contact the attorneys at Warren Law Group at (866) 954-7687 or email email@example.com to schedule your consultation.