Chairman of U.K. FCA slams Kim Kardashian for endorsing unregulated token EthereumMax
According to information from the U.K. Financial Conduct Authority (FCA), celebrity influencer Kim Kardashian has been cited as an example of crypto scams.
UK regulator slams Kim Kardashian for endorsing speculative token
Last June, Kardashian shared her hot not investment advice story on Instagram, tipping her followers to check out EthereumMax. Kardashian’s online and social media presence is not to be underestimated, judging by her fan base that counts 228 million followers on Instagram, 69 million followers on Twitter, and 33 million followers on Facebook (at that time).
EthereumMax is a project launched by unknown developers in May 2021. On its website, it features an upcoming NFT Marketplace and claims that it provides a 6% distribution of every transaction to existing eMax wallet holders just for owning it. But the claims are backed up by vague descriptions without any details about how it works. Since its launch, the price has decreased by over 50% after reaching its peak price on May 30. Despite its name, EthereumMax has no connection to Ethereum founders and currently claims to have over 109,000 token holders.
And in the latest statement, Charles Randell, chairman of the U.K.’s Financial Conduct Authority and chair of the Payments Systems Regulator, singled out Kardashian for endorsing a relatively unknown and unregulated token EthereumMax.
Speaking about token regulation and how investors can be protected from crypto scams, he mentioned, “Which brings me on to Kim Kardashian. When she was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by ’joining the Ethereum Max Community‘, it may have been the financial promotion with the single biggest audience reach in history.”
According to Randell, the hype generated around tokens by celebrity endorsements creates a fear of missing out among consumers who may have little understanding of their risks. He went on to say that consumers are often “lured into the crypto bubble with delusions of quick riches, sometimes after listening to their favorite influencers, ready to betray their fans’ trust for a fee.”
“In line with Instagram’s rules, she disclosed that this was an AD. But she didn’t have to disclose that Ethereum Max – not to be confused with Ethereum – was a speculative digital token created a month before by unknown developers – one of the hundreds of such tokens that fill the crypto-exchanges”, he stated.
However, her ad had little to no effect on the price of eMax. Kardashian is not the first, nor the last that celebrity that gave it a go at talking up a crypto project, the space wouldn’t have a catchy word like shill if this was the case.
Celebrities endorsing cryptocurrencies are not a new phenomenon. Rappers Snoop Dogg, West and Akon, singer and actress Paris Hilton, and boxers Mike Tyson and Floyd Mayweather have all endorsed cryptocurrencies at some point. But some of these celebrity-endorsed coins and crypto businesses haven’t fared well. Mayweather and DJ Khaled were fined for their involvement with coin Centra, which was charged with fraud by the U.S. Securities and Exchange Commission (SEC) in 2018.
While it is impossible to claim that EthereumMax is a scam, it is said that hundreds of such tokens fill crypto exchanges.
“Of course, I can’t say whether this particular token is a scam. But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote coins that turn out simply not to exist at all”, he added. “These tokens have only been around for a few years, so we haven’t seen what will happen over a full financial cycle. We simply don’t know when or how this story will end, but — as with any new speculation — it may not end well.”
EthereumMax has also been endorsed by Mayweather and American basketballer and Hall of Fame Boston Celtics champion Paul Pierce, with British boxer and two-time world heavyweight champion Tyson Fury being the latest addition to the list.
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