Kim Kardashian has agreed to pay a $1.26m (£1.12m) fine for advertising EthereumMax on her Instagram page.
The reality-TV star had received $250,000 for advertising the cryptocurrency, without disclosing she had been paid to do so.
She also agreed with the US Securities and Exchange Commission said not to promote crypto asset securities for three years.
"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," said SEC Chair Gary Gensler. "We encourage investors to consider an investment's potential risks and opportunities in light of their own financial goals."
"Ms. Kardashian's case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities," Chair Gensler added.
In early reaction, Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said: "The $1.26 million pound fine levied on Kim Kardashian for promoting Ethereum Max is a stark warning to other celebrities not to dabble in the dark world of crypto to make a quick buck.
"She was paid $250,000 to advertise the crypto currency, but didn't disclose to her followers she had received money to do so. This is a severe dressing down both financially and in terms of reputation for the Queen of reality TV who has agreed not to promote any crypto asset securities for three years.
"Her post also provoked ire from Britain's financial watchdog, the Financial Conduct Authority. Outgoing chair Charles Randell warning last year that it may have been the financial promotion with the single biggest audience reach in history, given the huge size of Ms Kardashian's following, which currently stands at 330 million.
"Regulators are clearly horrified at the damage superstar celebrities can do to the bank balances of vulnerable consumers, who are influenced by almost every move they make. The delusions of quick riches can spread far too rapidly on social media with speculation amplified by reposts by millions of followers."
Streeter added: "The FCA has repeatedly warned that investing in crypto currencies is extremely high risk and that speculators risk losing all their money if they indulge in trading on platforms which are largely unregulated.. It's worried that too many financially vulnerable people are being lured into ‘get rich quick' schemes, with 14% getting into debt during the pandemic to speculate in crypto assets.
"Ethereum Max has plummeted like a stone from an all-time high of $5.80 to be almost worthless given that it's now trading at $0.000000004312. The rollercoaster ride of crypto is far from over and regulators are determined to stop more consumers being caught up in a sharp downward spiral of prices.''
