STEFANI REYNOLDS/AFP via Getty Images
Ethereum Max has lost 95% of its value since June 2021, when Kim Kardashian promoted it.
Investing in tokens like EMAX is risky because the value can plummet, experts have told Insider.
Kardashian will pay an SEC fine for failing to disclose how much she was paid to promote EMAX, the SEC said.
If you’d been swayed by Kim Kardashian to buy Ethereum Max tokens last year, your holdings would have lost 95% of their value by now.
Kardashian promoted the token on her Instagram story in June 2021 — a post that’s now landed her in hot water with the Securities and Exchange Commission. The SEC announced Monday that Kardashian has will face a $1.26 million penalty and has agreed not to promote any crypto asset securities for three years in order to settle charges that she failed to disclose how much she’d been paid to promote Ethereum Max.
In the 16 months since her post, EMAX has dropped 95.3%. Which means that if you invested $100 after Kardashian promoted the token, your investment would only be worth about $5 today.
A screenshot of the ad that Kim Kardashian posted on her Instagram story promoting Ethereum Max.
EMAX’s value relies on hype from promoters like Kardashian
Ethereum Max, or EMAX as it’s commonly known, has been mired in controversy since launching in May 2021. The token isn’t affiliated with the more well-known Ethereum cryptocurrency — instead, EMAX is an altcoin that uses Ethereum’s Blockchain ledger to record sales and transactions.
EMAX’s value is based in hype: As investors and promoters like Kardashian spread the word, more people invest, and the price goes up. (Kardashian was paid $250,000 for her post, the SEC said — presumably in US dollars, though the regulator didn’t disclose. As part of the settlement, Kardashian neither admitted nor denied the SEC’s allegations.)
Altcoins like EMAX lack the stability of older types of cryptocurrencies like bitcoin and ether and, so far, EMAX has never reached meteoric highs like bitcoin has: At its peak in November 2021, bitcoin was worth about $69,000 per coin, while EMAX hit a peak that equated to $0.000000051 shortly after launch, according to CoinMarketCap.
Tokens like EMAX make for riskier investments because once investors stop buying or start selling, the token’s value can quickly plummet, crypto experts told Insider last year.
EMAX did just that. By January, the token’s value had plunged 98%, leading investors to sue Kardashian and other celebrities who had promoted the token, including boxer Floyd Mayweather and former NBA star Paul Pierce. Both Kardashian and Mayweather have filed motions to dismiss the suit, with their lawyers arguing that there’s insufficient evidence their endorsements led to the plaintiffs to buy EMAX.
While it’s unclear how many people invested based off the celebrity endorsements, Morning Consult data found that Kardashian’s advertisement reached about 1 in 5 US adults and roughly 30% of crypto owners.