Kim Kardashian along with Famous boxer Floyd Mayweather and basketball player Paul Pierce were involved in a crypto scam in June of 2021, Kardashian posted an Instagram story inviting her 328 million followers to invest in EthereumMax. “This is not financial advice,” Kardashian wrote in her story. “But sharing what my friends just told me about the Ethereum Max token!” Among other hashtags, she included the word “ad.” 

As the popularity of crypto has been on the rise, crypto companies have spent millions of dollars on marketing. Many of them have hired celebrities as spokespersons, including comedian Floyd Mayweather and retired Basketball player Paul Pierce, to promote their products. But after the value of Bitcoin and other digital currencies plummeted, many of them have been criticized for boosting them.

As more and more celebrities promote products online, regulators have started to take a closer look to make sure that they’re following rules.

The problem was Kim did not disclose that she was being paid 250,000 U.S. Dollars to promote EthereumMax. Kim has owned up to the charges brought against her as she has to pay $1.26 million in penalties to the Securities and Exchange Commission (SEC) to settle charges that she promoted a cryptocurrency token on social media without disclosing how much she was paid for the promotion but has not.

The SEC released the statement saying “SEC Charges Kim Kardashian for Unlawfully Touting Crypto Security. The Securities and Exchange Commission today announced charges against Kim Kardashian for touting on social media a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion.”

The Federal Trade Commission, for instance, has also cracked down on celebrities and social media influencers who don’t adequately disclose their connections or that they are paid for the products they promote.

Two years ago, the FTC fired off warning letters to several Internet influencers and celebrities, like the recording artists Cardi B and Jordin Sparks, reminding them of their legal obligation to disclose their connections to the products they promote.

While Kardashian didn’t admit or deny the SEC’s findings, in an agreement with the regulator, she agreed to not promote any crypto asset securities for three years. As well as return the 250,000 U.S. dollars she was paid and pay the 1.26 million dollars fine to the SEC.