X's fine, issued on Friday, was the first under the EU's Digital Services Act.
The EU regulator said the platform's blue tick system was "deceptive" because the firm was not "meaningfully verifying users".
"This deception exposes users to scams, including impersonation frauds, as well as other forms of manipulation by malicious actors," it said.
It claimed X was also failing to provide transparency around its adverts, and was not giving researchers access to public data.
The social media platform has been given 60 days to respond to the Commission about concerns surrounding its blue checkmarks, or face extra penalties.
Following the fine, Elon Musk posted on his platform to say the EU "should be abolished", and retweeted a response from another X user comparing it to fascism.
US Secretary of State Marco Rubio and the Federal Communications Commission (FCC) accused the EU regulator of attacking and censoring US firms, adding, "the days of censoring Americans online are over".