Why Is Kim Kardashian Hawking a Sketchy New Cryptocurrency?
The reality star asked her 228 million Instagram followers if they were “into crypto” in an #ad for EthereumMax. A financial planner says he wouldn’t touch the new cryptocurrency.
Kim Kardashian had an unusual question for her millions of Instagram followers on Sunday night.
“Are you guys into crypto????” she asked on her Instagram Story. “This is not financial advice but sharing what my friends just told me about the EthereumMax token. A few minutes ago EthereumMax burned 400 trillion tokens—literally 50 percent of their admin wallet giving back to the entire E-Max community.”
Of course, the Keeping Up with the Kardashians star wasn’t suddenly an expert on the confusing and volatile world of cryptocurrencies, nor was she freely dishing out life-changing investment advice to her 228 million fans to spread the wealth. Instead, she was cashing in on a well-paid advertisement.
A week earlier, EthereumMax was also being promoted by another celebrity: Floyd Mayweather. The semi-retired boxer was spotted wearing the company’s merch in the lead-up to his embarrassing “fight” against YouTuber Logan Paul in Miami. “Cryptocurrency it’s the new wave, it’s what everybody’s doing,” Mayweather told the press.
Pulling in such high-profile names is an impressive feat for a new cryptocurrency, which has only been on the market a month. It would also have cost top dollar, as Kardashian reportedly charges anywhere between $300,000 and $500,000 per sponsored Instagram post that remains on her feed.
It’s not exactly clear how much she would charge for an Instagram Story, which disappears after 24 hours, but she posted two ads hawking EthereumMax—first in a video declaring that she had “big news” before she shared the full ad encouraging people to look into the cryptocurrency. It’s also unknown if Kardashian was given an amount of EthereumMax in exchange for pumping the nascent coin on her social media.
However, cryptocurrency and investment experts are warning people to stay far away from the relatively unknown EthereumMax.
“To be honest with you, I would not touch this,” Michael Kelly, President of Switchback Financial, told The Daily Beast. “There’s no white paper out about it to really let you know what they’re fully about. They have a website and whatnot, but it doesn’t tell you very much. There’s just a lot of sketchy stuff around it.”
“They’re leveraging so much around this, that to me, it’s a marketing ploy,” the Connecticut-based financial planner added. “There’s just nothing behind it. So again, would you invest your money in something that just had a good name, but didn’t have anything else?”
“It’s a little scary in that sense when you start seeing someone like Kim Kardashian, who is in the top 10 influencers in the world, posting stuff like that. I would just say, where’s the shame in some of this?”
It’s a head-scratcher why Kardashian, an image-obsessed billionaire, would agree to back a random cryptocurrency even for a hefty fee, but there happens to be a logical explanation: EthereumMax is connected to her multi-millionaire friend David Grutman.
Grutman is the nightlife king of Miami, running Groot Hospitality, which is behind some of the biggest celebrity hotspots in the city, including LIV, Komodo, Story, Papi Steak, and Swan.
Kardashian and Grutman go back years, and she attended his wedding to model Isabela Rangel in 2016. She was also in attendance at the star-studded opening of Grutman’s latest Miami hotel and restaurant venture The Goodtime Hotel and Strawberry Moon in April, which he co-created with Pharrell Williams. Mayweather and Grutman are pals as well, with the boxing champ frequently spotted at his Miami nightclubs and restaurants.
Not so coincidentally, EthereumMax is now accepted as the exclusive cryptocurrency at Grutman’s locations, such as LIV and Story, and this news was heavily touted in the lead-up to Mayweather and Paul’s pay-per-view fight.
“eMax is excited to partner with Groot Hospitality to bring eMax and Cryptocurrency to Miami Nightlife & Entertainment,” a representative for eMax said in a statement. “This is the first of many opportunities where we see EthereumMax as a reliable payment method for real life usage and provide exclusivity to our community.”
Groot Hospitality also boasted of the news on its social media account, but the post has since been deleted. It later announced it had to postpone the use of EthereumMax at its locations because of “processing,” but added it hoped to work toward accepting it soon.
According to the company, the cryptocurrency is a “decentralized ERC-20 growth token built on the secure Ethereum network” that provides three percent distribution of every transaction made with the cryptocurrency to “existing eMax wallet holders just for owning it.”
Calling itself the “Culture Token,” it also claims to provide “access to VIP experiences with lifestyle brands, exclusive access to sporting events and concerts.”
It’s not clear what exact ties Grutman has with EthereumMax, or if he has heavily invested in the cryptocurrency, but he’s one of the few people the company follows on Instagram.
Still, Kardashian and Mayweather promoting EthereumMax to fans who might know very little about the complexities of cryptocurrency feels a tad exploitative to Kelly.
“With these cryptocurrencies, they’re so volatile, they’re not stable. One of the big stories around Bitcoin was when it started originally, some guy bought pizza with it, and now what he paid in Bitcoin for that pizza is worth millions of dollars. It’s not a viable transaction component, there’s nothing to hold that stable.”
“Finance is already a difficult kind of world to be in. It’s a difficult industry that people hate for a reason. It’s purposely confusing and we don’t teach finance in school, so people are already in an uphill battle. There’s already a lot of trust loss through 2008 and when you see this kind of stuff, it’s frustrating as a financial planner who wants to do the right thing and educate people.”
“I always tell my clients, whether it’s crypto or stock bonds, is know what you’re getting into,” Kelly added. “If you don’t know them, why are we buying it?”
Other experts agree with Kelly’s assessment of EthereumMax, the dangers of celebrity promotional financial advice, and the nature of cryptocurrency in general.
“I don’t know anything about EthereumMax, but I know if they burn 400 trillion tokens and that’s already half of what they had in their admin wallet, that still means they still have 400 trillion tokens in their admin wallet, which is a whole other conversation to have,” remarked Adam B. Levine, managing editor of podcasts at the cryptocurrency investment site CoinDesk, on the website’s episode of The Hash on Monday.
“I just want to make sure that I nail down the idea that this is actually, nothing about EthereumMax or Kim K specifically, but the trend is definitely going to hurt people,” added panelist David Morris. “I strongly in general urge people to be cautious, because we are already seeing people mad at Elon Musk because they mortgaged their houses to buy Dogecoin and then he got bored with it. That’s all this in a bigger picture.”