Kim Kardashian Fined 1.8 Billion Won for Cryptocurrency 'Undisclosed Promotion' on Instagram

Kim Kardashian [Photo by AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Kim Kardashian (41), an American model and fashion entrepreneur, has been fined over 1.8 billion KRW for allegedly promoting a specific cryptocurrency without disclosing advertising or sponsorship on her social network service (SNS), a so-called 'stealth advertising' violation.

According to Bloomberg and other sources on the 3rd (local time), the U.S. Securities and Exchange Commission (SEC) revealed that it had detected Kardashian's violation of federal securities laws and that she would pay a fine of $1.26 million (approximately 1.81 billion KRW). She also agreed not to promote digital assets for the next three years.

According to the SEC, Kardashian received $250,000 in exchange for posting promotional content about a type of cryptocurrency called 'EthereumMax (EMAX)' on her Instagram, but failed to disclose this fact accurately. Although the post Kardashian made last year included an '#AD' advertising label at the bottom, the SEC judged that investors could not recognize it as an advertisement.

The SEC has previously warned about stealth advertising by celebrities and influencers on SNS platforms such as YouTube, Instagram, and TikTok. In 2018, the SEC fined boxer Floyd Mayweather and music producer DJ Khaled for stealth advertising cryptocurrency. At that time, Mayweather paid a $600,000 fine, and Khaled paid $150,000.

Gary Gensler, SEC Chairman, tweeted, "This is an example that investment opportunities such as cryptocurrencies promoted by celebrities or influencers are not suitable for all investors," and advised, "Individual investors must consider the potential risks and opportunities associated with investments."

Regarding this settlement, Kardashian's lawyer said, "We are pleased that this matter has been resolved," adding, "Kardashian fully cooperated with the SEC from the beginning and is willing to do anything to assist the SEC in this case."

Kardashian is a model and famous star who gained recognition through American reality TV programs and later built a net worth estimated by Forbes at $1.8 billion through clothing and beauty brand businesses.