To Kim Kardashian’s fans and followers, her endorsement of a product signals the product is on trend. However, when a simple post endorsing cryptocurrency goes out to the world, it may have not so simple ramifications.

On Oct. 3, 2022, the Securities and Exchange Commission (SEC) settled with Ms. Kardashian for violating Section 17b of the Securities Act of 1933, the anti-touting provision that requires individuals to disclose to the public when and how much they are paid to promote investing in securities. Persons making these endorsements may also be liable for potential violations of the anti-fraud provisions of federal securities laws, for participating in an unregistered offer and sale of securities, and for acting as unregistered brokers.[1] In a series of posts to her Instagram story, Kardashian asked her followers, “Are you guys into crypto??? This is not financial advice but sharing what my friends just told me about the ethereum max token!” Ms. Kardashian’s followers were then encouraged to head to the EthereumMax website and “join the E-Max community.”[2] Hashtags were added to the post and included “#ad” to denote that the post was a paid promotion. However, the SEC did not find the hashtag clear enough notice that Ms. Kardashian was being paid to promote EthereumMax. Kardashian’s actions resulted in a $1.26 million dollar fine ($260,000 of which were disgorgement funds resulting from the payment she received to post).

The SEC’s actions signal to celebrities and other promoters that they must disclose whether they have received payment for promoting or endorsing a security. The charge further indicates that promoters may be liable for other violations of law including acting as an unregistered broker and anti-fraud provisions. Finally, the SEC’s actions remind consumers to do their own research, as celebrities generally do not have sufficient expertise to make appropriate recommendations. An SEC investor alert dated November 2017 warned of the perils involved for investors making decisions merely based on the endorsement of a celebrity.[3]

Finally, the Federal Trade Commission (FTC) has provided endorsement guidelines[4] on celebrity endorsements (Federal Trade Commission 16 CFR Part 255). The guidelines are not as strict as the SEC’s and generally require disclosure of a “material connection” between the endorser and the company/product. Regulatory actions by the FTC come in the form of civil penalties and typically result in consent agreements.


[1] SEC.gov | SEC Statement Urging Caution Around Celebrity Backed ICOs

[2] Kim Kardashian paid $1.26 million for promoting illegal crypto (fudzilla.com)

[3] SEC.gov | Investor Alert: Celebrity Endorsements

[4] Guides Concerning the Use of Endorsements and Testimonials in Advertising (ftc.gov)

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Photo of Barbara A. Jones Barbara A. Jones

Barbara A. Jones is Co-Managing Shareholder of the firm’s Los Angeles office and a member of the firm’s Global Corporate practice. Barbara serves as Chair of the firm’s interdisciplinary Blockchain & Digital Assets practice. Barbara maintains a diverse corporate and securities law practice

Barbara A. Jones is Co-Managing Shareholder of the firm’s Los Angeles office and a member of the firm’s Global Corporate practice. Barbara serves as Chair of the firm’s interdisciplinary Blockchain & Digital Assets practice. Barbara maintains a diverse corporate and securities law practice across industry groups, emphasizing complex international and domestic transactions, including private and public financings, dual listings, mergers and acquisitions, strategic collaborations and joint ventures, and licensing transactions. She serves as a trusted advisor to public and private company boards of directors on governance matters and complex regulatory reporting and compliance issues. Barbara’s clients include financial institutions, private equity and venture capital groups, and public and private companies in emerging technology, life sciences and biotechnology, defense and security, blockchain and digital assets, telecommunications, information technology, energy (traditional and renewable), mining, media, entertainment and sports. Barbara also represents Olympic and professional athletes and sports-related organizations.

Barbara practiced U.S. law in London from 1990 through 1997 with Sullivan & Cromwell, LLP, and headed the international capital markets practice of Kirkland & Ellis LLP from 1999 to 2003 before relocating to Boston. From 1997 to 1999, she served as Vice-President, Assistant General Counsel and Regional Counsel for capital markets with J.P. Morgan Securities Ltd. in Europe, the Middle East and Africa. Since returning to the U.S., she has continued to actively represent public and private companies, private equity groups and investment banks in the European, Scandinavian, African and greater Asian markets, including China.

Barbara is a past chair of the ABA’s Subcommittee on International Securities Matters. She is a frequent speaker at conferences relating to cross-border securities matters, strategic alternatives, and digital asset structures. She serves on the Government of Bermuda’s Global FinTech Advisory Board.

Photo of William Mack William Mack

William B. Mack is a co-chair of the Financial Regulatory and Compliance Practice. He is experienced in advising companies on regulatory and compliance matters relating to the Securities and Exchange Commission regulations, the Exchange Act, Anti-Money Laundering laws and Financial Industry Regulatory Authority

William B. Mack is a co-chair of the Financial Regulatory and Compliance Practice. He is experienced in advising companies on regulatory and compliance matters relating to the Securities and Exchange Commission regulations, the Exchange Act, Anti-Money Laundering laws and Financial Industry Regulatory Authority (FINRA) rules.

William’s practice involves all aspects of broker-dealer regulation, including Self-Regulatory Organization (SRO) membership, supervision, employment, research, soft dollar arrangements, chaperoning of foreign broker-dealers, social media, use of foreign finders, anti-money laundering rules, alternative trading systems (ATS), exchanges, and market making issues. He also provides regulatory guidance to investment banking clients in connection with securities offerings and related trading issues.