With the growth of the metaverse, it is only natural that it would start to appear in every aspect of our lives, including social media. Kim Kardashian was recently charged by the SEC and settled for $1.26 million on October 3 for failing to disclose that she was paid to promote EthereumMax, one of the many cryptocurrencies on the market right now.
This is not the first time that a celebrity has been charged with this particular offense. Recording artist, DJ Khaled, and professional boxer, Floyd Mayweather Jr., were charged with failing to disclose payments made to them for promoting crypto company Centra’s various digital currencies. U.S. securities law states that people who promote the sale of securities, including cryptocurrency, must disclose if they were paid, how much they were paid, and by whom they were paid to promote the security. (It is worth noting that crypto has not legally been officially designated a security…but that is an issue for another blog post!)
Why is this important? Well, it is important to analyze where Kim went wrong so that it does not happen to other influencers. As part of her settlement, Kim Kardashian is not allowed to promote cryptocurrencies for the next three years. As this market continues to grow, this is a major revenue stream she could potentially be missing out on and it is important to learn from her mistakes. Kardashian did indicate that the post was an ad but also stated “sharing what my friends just told me about the Ethereum Max token,” thus potentially creating consumer confusion on whether this is a paid ad or not. If you are an influencer, it is important to know what laws surround the product that you are advertising in order to avoid situations similar to Kim Kardashian’s.
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