Kim Kardashian fined $2.2m over crypto 'pump and dump' scheme

Kim Kardashian has landed in hot water with the authorities over an Instagram post. Photo / AP

Kim Kardashian is reaching deep into her pockets.

In what has been called a "pump and dump" scheme by critics, the reality TV star has paid a huge fine after promoting a cryptocurrency asset on Instagram.

New York Post has reported Kardashian has been charged by the US Securities and Exchange Commission "for touting on social media a crypto asset security… without disclosing the payment she received for the promotion".

The commission went on to say the Skims founder has since "agreed to settle the charges, pay US$1.26 million ($2.2m) in penalties, disgorgement, and interest, and cooperate" with the ongoing investigation.

Adding the mother of four did not admit or deny the SEC's findings.

Speaking on behalf of the reality star, a spokesperson told the NY Post, "Ms Kardashian is pleased to have resolved this matter with the SEC."

"Kardashian fully cooperated with the SEC from the very beginning and she remains willing to do whatever she can to assist the SEC in this matter."

Adding that Kardashian wanted to "get this matter behind her", continuing on to say the agreement she and the SEC agreed to allows the star to move forward with other "business pursuits".

Part of the agreement includes the star refraining from posting or promoting any crypto-related assets for three years.

Kardashian was allegedly paid US$250,000 ($437,442) to post the promotion to her 331 million Instagram followers. However, she did not disclose that fact.

SEC Chair Gary Gensler told the news outlet, "This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it doesn't mean that those investment products are right for all investors."

Kardashian is not the only celebrity to have been a part of the "pump and dump" scheme.

BBC reported former boxer Floyd Mayweather and basketball player Paul Pierce were also named in the lawsuit, which set out to prove they "mislead" their followers into making a crypto purchase.

The legal action against the three stars and crypto company, EthereumMax in January, alleged they had collaborated to "misleadingly promote and sell" the cryptocurrency in a "pump and dump" scheme designed to inflate the price before selling to investors.

EthereumMax denied the allegations at the time.