Kim Kardashian’s recent run-in with the SEC is a warning for other influencers.

The reality TV star and influencer agreed to settle with the SEC for $1.26 million. The accusation? Failing to disclose a payment she received for promoting EthereumMax on her Instagram account with over 300 million followers.

One key takeaway from this settlement is that the SEC’s penalties for unlawful advertising practices can be very steep. In this case, Kardashian was paid $250,000 for the promo, but ended up paying more than 4 times that amount.

If you are an influencer, whether you’re promoting crypto or any other product, here’s are some tips before you make your next #AD post.

Be Aware of FTC and SEC Guidelines

The FTC and SEC are separate regulating bodies with different roles, but both have some clout when it comes to enforcing advertising laws. If you’re advertising any products or services, it’s important to make sure your content adheres to FTC guidelines.

The SEC’s job is to regulate securities (including cryptocurrencies) and the promotion of securities.

“It’s important to know that the FTC and SEC each have their own guidelines and since EMAX was considered a security, it falls under the SEC’s view,” says crypto attorney Andrew Gordon.

As Kim Kardashian had to learn the hard way, sometimes tacking #AD onto your caption isn’t enough to satisfy regulators.

SEC compliance requires any advertisements of securities to include the nature of compensation, the source, and the amount you were paid.

Simple disclaimers such as “this is not financial advice” or “do your own research” aren’t enough to get you off the hook if the SEC determines you’re advertising a security.

What Does This Mean for Influencers Moving Forward?

The SEC understands the magnitude of this settlement and it has placed both the world of cryptocurrency and social media influencers on notice.

Kardashian’s agreement to settle for such a large sum of money tells us the SEC is not sitting back and watching.

“The SEC has essentially gotten millions of dollars of free advertisements [about] what compliance requirements exist by going after Kim,” says Gordon.
For Kardashian, the punishment of $1.2 million plus interest may amount to only a slap on the wrist. For social media influencers who aren’t as wealthy, a penalty of this level could be damaging.

“For a lot of other influencers out there, this is something to definitely take notice of,” says Gordon. He says many influencers don’t realize just how much exposure they could face for unlawful promotions.

Kim’s Instagram post did not warn investors of the potential risks of investing in Ethereum Max, which was one of the major issues the SEC had with it. One of the main responsibilities of the SEC is to protect investors from being taken advantage of through unregulated investments.

Social media influencers must be upfront about risky investments that could leave their followers in the red.

Worried about your compliance? We can help!

Whether you are a new influencer building your following or an experienced influencer with millions of followers, it’s important to make sure you comply with both SEC and FTC guidelines. We help influencers daily to ensure their content, landing pages, and social media accounts meet the proper standards.

Are you worried that didn’t disclose your paid advertisements properly and that the SEC or FTC maybe after you next? Don’t wait any longer! Schedule your consultation today to learn more about how to protect yourself.