What is EthereumMax (EMAX)? Reasons for Class Action Lawsuit Against Crypto Token
EMAX, or EthereumMax, is a cryptocurrency token that was created on the Ethereum network by anonymous developers last year. Despite the token’s white paper’s promise of building a “robust and scalable ecosystem that fully exploits the power of DeFi,” these lofty expectations have yet to be met.
EMAX investors sued Kardashian and boxer Floyd Mayweather in January after the token plummeted following their promotion. EMAX was accepted as payment for Mayweather’s fight against YouTuber Logan Paul last year, and the boxer was booed for wearing EMAX T-shirts at last year’s Bitcoin Conference.
Kardashian’s lawyers moved to dismiss the investors’ lawsuit in August partly because the plaintiffs didn’t specifically say in the original court filing that they had seen Kardashian’s Instagram post. Last week, Mayweather also moved to dismiss the suit, saying in a filing that investors were just looking for a “deep pocket.”
Former Boston Celtics player Paul Pierce also was named in the lawsuit. Pierce tweeted about the coin several times, including in May 2021 after he was fired by ESPN, saying he didn’t need the sports network.
SEC Chair’s Political Antics?
On Monday, Securities and Exchange Commission Chair Gary Gensler got what he wanted. A $1.26 million fine was slapped on Kim Kardashian by his agency for promoting a cryptocurrency on Instagram. It was the top story of the day in the business and tech press, which isn’t surprising since Gensler planned it that way—announcing it on a Monday before markets opened and hyping it up with a video designed to ride the coattails of Kardashian’s celebrity status.
What a shame this is all so stupid. As some astute Twitter users pointed out, the promotion in question was from June of 2021, and the SEC’s fine matters little in the bigger picture of crypto regulation.
Guess SEC’s Anti-Fraud Crypto Rules
Meanwhile, Gensler’s agency failed to spot the massive fraud underlying Terra and Celsius earlier this year that helped wipe out more than $1 trillion, much of it from small investors.
His SEC has also refused to approve a Bitcoin ETF akin to those in place in Canada and Europe, a step that would save retail investors millions in fees.
And in what amounts to a dereliction of basic duties, Gensler’s SEC has refused to provide clarity on the critical issue of what constitutes a security in crypto markets. Instead, he has chosen a “regulation by enforcement” approach, leaving companies to guess the SEC’s rules instead of crafting a legal process to define them. This sleight of hand has included using legal settlements to declare that certain tokens are securities—a tactic that leaves defendants no chance to rebut, and lets the SEC make decisions without explaining them.
The reasons for Gensler’s behavior are no secret. Ask anyone in Washington, D.C., and they’ll tell you he is gunning to be Treasury secretary after Janet Yellen leaves the post. This includes a senior lawyer who worked closely with Gensler at the SEC and said that he is doubling down on theatrical enforcement actions in hopes of pleasing Sen. Elizabeth Warren, who has President Joe Biden’s ear on financial policy. (The source added that Warren is not fond of him, and Gensler has no hope of realizing his dream.)
Gensler is hardly the first agency head to have outsize ambitions, and there is nothing wrong with the SEC cracking down on celebrity crypto shills like Kardashian. The issue is that his decision to prioritize media antics and his own ego is actively hurting investors and the country. Blockchain and crypto are here to stay, and if the industry is to flourish in the U.S. just as the Internet did, there must be clear rules and a regulatory framework to make that happen. Monday’s stunt makes plain that Gensler has no interest in doing hard policy work, and that the SEC has become a vehicle for his personal ambition. We deserve better.
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