What is EthereumMax? Behind the Scenes of Kardashian’s Crypto Controversy.
Celebrity endorsements for cryptocurrencies are nothing new. Spike Lee, Mark Wahlberg, and many other social media influencers, anchors, and more have all participated in cryptocurrency advertising. But social media’s number one “influencer” has gotten into trouble for promoting a particular cryptocurrency, EthereumMax (EMAX). In the first week of October, socialite Kardashian was hit with a $1.26 million regulatory fine for improperly promoting the token. What is this EMAX currency, how does it relate to Ethereum, and how did it land Kardashian in a legal battle?
What is EthereumMax?
The first point of confusion is the name. Although its name includes the name of the second-largest cryptocurrency by market capitalization (Ethereum), EthereumMax is not actually associated with the cryptocurrency ether (ETH) . Instead, the coin, like many others, was originally created on top of the Ethereum blockchain. Confusingly, the project has moved from the Ethereum network to the competing Arbitrum network. While this may create a false impression to those who have only occasionally heard of top cryptocurrencies, it’s not the problem that got Kardashian in trouble.
Is EMAX safe?
Like many small cryptocurrencies, EthereumMax promises to anyone willing to buy tokens in advance, hype. The EMAX marketing campaign was characterized by flashy advertisements, proclaiming that it had the potential to revolutionize the financial industry, and more importantly: suggesting that the token would appreciate in value.
It was EMAX promoters’ predictions of higher prices that drew the ire of the U.S. Securities and Exchange Commission (SEC), which said on Monday that investors participating in the events would have a “reasonable expectation” of profiting from their investments. This expectation classifies EMAX as a security, just like a stock or bond.
Technically speaking, the SEC does not regulate cryptocurrencies, but it does have precedents for treating digital assets as securities and trying to regulate them. If cryptocurrencies catch the SEC’s attention, they may eventually have to be restructured to comply with SEC rules, but so far, regulators have taken action against only a tiny fraction of cryptocurrencies. What makes EthereumMax an SEC target is the same thing that grabs investors’ attention: celebrity endorsements, including Kardashian. Through the investigation of EMAX, the SEC obtained a high-profile case, borrowing Kardashian’s celebrity effect to “kill the chicken and teach the monkey”.
On Monday, October 3, the SEC fined Kardashian for promoting EMAX to her 225 million Instagram followers in June 2021 without disclosing that the token creator actually paid her $250,000 to promote it Fee facts. This is arguably a financial promotion on an unprecedented scale, but marketing securities in this way violates U.S. law.
What is the purpose of EthereumMax?
In its white paper, EthereumMax promises to build a “robust and scalable system” based on decentralized finance (DeFi). The gimmick of EMAX is: its purpose is to serve as a “cultural token”, allowing EMAX holders to obtain “exclusive access” to “the most popular restaurants and clubs”. The project has yet to launch, and so far, the only use of EMAX tokens is to play casino games on the company’s website (the games don’t pay cash, cryptocurrencies, or otherwise).
EMAX Market Performance
Highlighting EthereumMax’s policy of burning tokens to increase its scarcity, Kardashian’s Instagram ad depicts the 400 trillion token burn as “giving back to the entire EMAX community.” That didn’t appear to benefit investors, however, as EMAX shares have plunged 97% since her announcement. That said, the demand for the token has not continued over time. Still, after news of the SEC ruling, the price jumped 40%, indicating that there is still community support for the coin, perhaps not without the so-called negative publicity. As of this writing, the value of EMAX is only $0.000000005914, which is less than a fraction of $1, indicating that it is still far from the social elite cultural token.
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