SEC charges Kim Kardashian for unlawfully touting crypto on Instagram The reality TV star hawked a crypto token on her Instagram account without telling her hundreds of millions of followers she'd been paid to do so.

SEC charges Kim Kardashian for unlawfully touting crypto on her Instagram account

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MARY LOUISE KELLY, HOST:

Kim Kardashian has gotten into trouble with the country's top financial cop. She has to pay a fine of more than a million dollars. So what happened? NPR's David Gura joins me. Hey, David.

DAVID GURA, BYLINE: Hey, Mary Louise.

KELLY: Why are regulators going after Kim Kardashian?

GURA: So today the Securities and Exchange Commission said a company behind this cryptocurrency called EMAX paid Kim Kardashian a quarter of a million dollars to post about it on Instagram. And while she did include the hashtag #ad in that post, Kardashian did not tell her 330 million followers how handsomely she'd been paid for it. Gary Gensler, the chair of the SEC, says that hashtag may be sufficient if an influencer is hawking jewelry or clothes. But he told CNBC this morning that if you're touting a cryptocurrency, it is not enough.

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GARY GENSLER: In the securities laws, Congress put in place that you have to disclose not only that you're getting paid but the amount, nature of it. And this was really to protect the investing public.

GURA: Mary Louise, the SEC takes this so seriously because cryptocurrencies have attracted so many amateur investors who could lose a lot of money in crypto. Kardashian is not admitting or denying the SEC's findings, but she is forking over the $250,000 she was paid for the post plus interest, also a million-dollar fine. And she's also agreed not to promote any crypto for the next three years.

KELLY: How did Kim Kardashian, she of the 330 million Instagram followers - how did she come to be promoting crypto anyway?

GURA: Well, as crypto's popularity has exploded, it's become a rich vein for celebrities. Many crypto companies hired them as part of a multimillion-dollar ad blitz. There was Matt Damon in a commercial for crypto.com during the Super Bowl. Just to put this in perspective, while tens of millions of people watched that game, Kim Kardashian has hundreds of millions of followers on Instagram. But a lot has changed recently. The value of bitcoin has dropped precipitously. It's the same story with other digital currencies. And now these celebrities are facing a lot of criticism.

KELLY: Well, and these huge fines that have to hurt even if you're a rich celebrity. Are we going to see more targets?

GURA: The Biden administration is really interested in cracking down on fraud in crypto. It's pledged to take a more serious look at it. And the SEC says this investigation is ongoing. That Matt Damon ad I mentioned - one securities law expert I spoke with said there is an important distinction here. Kardashian was touting a specific cryptocurrency. Matt Damon was paid to promote a company.

KELLY: So what is your takeaway from today's settlement?

GURA: I don't need to tell you this is a big name and created quite a splash. But the SEC has not been shy about saying it's taking crypto seriously because of how many first-time investors are buying it. Elizabeth Goldman used to work at the SEC. Now she's a law professor at Cardozo, where she also works with first-time investors, many of whom she says are poor and have been casualties of this crypto craze.

ELIZABETH GOLDMAN: You know, a thousand-dollar investment might be all the money they have, or $5,000 might be all the money they have. And we are also seeing a fair number of frauds in this space.

GURA: One of the SEC's core mandates is investor protection. It also said in its announcement today, Mary Louise, it wants to send a message to celebrities making endorsements that they should do more due diligence.

KELLY: That's NPR's David Gura. Thank you, David.

GURA: Thank you.

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