Don’t be influenced by Kim Kardashian's recent support of the Ethereum Max (EMAX) crypto, according to Charles Randall, head of the United Kingdom’s Financial Conduct Authority (FCA).
Social media influencers like Kardashian are “routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation,” Randall said in a Sept. 6 speech to the Cambridge International Symposium on Economic Crime.
Kim Kardashian endorsed EMAX crypto on Instagram.
On June 13, Kardashian posted an Instagram story in support of EMAX to her 250 million followers.
"Are you guys into crypto???? This is not financial advice but sharing what my friends just told me about the Ethereum Max token! A few minutes ago Ethereum Max burned 400 trillion tokens—literally 50% of their admin wallet, giving back to the entire e-max community,” reads Kardashian’s Instagram post.
It might have been a financial promotion with the single biggest audience reach in history, Randall said.
Although Kardashian did identify the post as an #AD, she didn’t disclose that EMAX is a speculative digital token created just a month before her Instagram post, Randall said.
“There is no shortage of stories of people who have lost savings by being lured into the cryptobubble with delusions of quick riches, sometimes after listening to their favorite influencers, ready to betray their fans’ trust for a fee,” Randall said.
Randall said he couldn’t say whether or not EMAX, in particular, is a scam but that there have been coins promoted by social media influencers that turned out not to exist.
Speculative crypto tokens aren't regulated by the FCA and consumers aren't covered or protected by the Financial Services Compensation Scheme, Randall said
“If you buy them, you should be prepared to lose all your money,” he said.
Should cryptos be regulated?
Randall said that the potential for consumer harm from speculative cryptos like EMAX raises the question of whether cryptocurrencies should be brought within FCA regulation.
Much like the SEC in the U.S., the FCA is responsible for regulating the financial services industry in the UK and protecting consumers. SEC Chairman Gary Gensler also promotes more regulation in the crypto world.
Is EthereumMax legit?
Meanwhile, EthereumMax is a cryptocurrency that was created in May 2021. Although EMAX shouldn’t be confused with Ethereum, it's an ERC-20 token on the Ethereum blockchain.
Ethereum Max promotes itself as the fastest-growing crypto community. Influencer endorsements might fuel that growth. Besides Kardashian, the altcoin has also received endorsements from NBA legend Paul Pierce and former professional boxer Floyd Mayweather.
“@espn I don’t need you. I got @ethereum_max I made more money with this crypto in the past month then I did with y’all in a year,” Pierce tweeted on May 26.
Endorsements from Mayweather and Pierce might not help EMAX with its legitimacy. Mayweather got in trouble with the SEC in 2019 for tweeting about a coin that was a fraud. Pierce’s fans have accused him of having a reputation of "shilling."