Kim Kardashian’s $1 million fine could affect Uniswap, SushiSwap and other decentralized exchanges

The US Securities and Exchange Commission (SEC) fined celebrities Kim Kardashian $ 1,000,000 Fail She revealed that she received $250,000 to promote Ethereum Max (EMAX). In January, Kardashian, boxer Floyd Mayweather and basketball star Paul Pierce alleged they were misled by separate posts shared with their millions of followers on social media, alleging they invested in the same cryptocurrency. sued from home.

None of the listed defendants, including the alleged creator of Ethereum Max, responded to the record. forbesRequest for comments.

Celebrity incidents are just the beginning of their potential repercussions. The same investigator who investigated the high-profile battle against Ripple Labs, Mark R. Sylvester of his unit of Cryptocurrency and Cyber, will investigate the matter of Ethereum Max, according to an SEC statement. co-leads an eight-person team of Kardashian will assist the investigation in exchange for being allowed to settle without admitting or denying the charges, according to a statement. forbes The investigation is ongoing, but declined to provide additional comment.

Among the possible impacts of the investigation into the infamous cryptocurrency, which has fallen 99% from its all-time high and is now worth $12 million, is the money that is paid to the creators of the currency, i.e. the servers that support the cryptocurrency. I have a question about the impact on people who are Software, exchanges that allowed asset trading, and other defendants named in class action lawsuits.

“As far as I understand it, EMax is a cryptocurrency that promises access to clubs and the like, and has partnered with the celebrities who facilitated it,” said Brown Reddick, a law firm that specializes in cryptocurrency regulation. partner Preston Byrne said. “If I were a regulator, I would look at who arranged those partnerships and advertised and sold the coins to find out where leverage could be applied.”

Miraculously, the asset actually surged by 40% in the hours after the announcement. But where do you go to buy unregistered securities that are widely known to be fraudulent? The following is not investment advice.

click here To enroll in the Forbes CryptoAsset & Blockchain Advisor.

Searching for where you can buy assets will give you one eye-catching answer and some tricky possibilities. The first hit is called Coinbase Wallet. While his leading $15 billion Coinbase exchange allows users to recover lost passwords from a centralized service if they entrust control of their assets, Coinbase Wallet is a self-custody service. More freedom to purchase diverse assets.

CoinMarketCap, a subsidiary of Binance that tracks asset prices, lists only two exchanges where the asset can be found. Both are decentralized, Uniswap and SushiSwap. Unlike centralized exchanges that function like traditional businesses, anyone can trade on decentralized exchanges, and in theory they cannot be shut down as long as the underlying blockchain is working. .

A Uniswap Labs spokesperson said the company has no control over the open-source protocols that anyone can build, but it occasionally blocks assets in web applications built using the same protocols. “We are working on the details of the news,” the spokesperson said, “but generally on his web app of our company he blocks tokens that are subject to SEC action. .”

Interestingly, in November 2018, the SEC filed a cease and desist order against the creators of decentralized exchange EtherDelta, stating that “an entity that provides algorithms and runs on computer programs or smart contracts using blockchain technology. can provide trading functionality as a means of composing or executing orders.” Zach Coburn, creator of EtherDelta Settlement We neither admit nor deny the accusation that the SEC operates as an unregistered stock exchange.

Last month, the Commodity Futures Trading Commission (CFTC) announced two separate actions against creators of decentralized autonomous organizations (DAOs) for failing to adopt Know Your Customer programs as part of the Bank Secrecy Act. did. One he settled was against the executives behind bZeroX, LLC., and another one he made against Ooki DAO that the CFTC was running the same software. Regarding the ongoing case, the CFTC provided documents to the creator of Ooki on an online forum.

While the non-profit Electronic Frontier Foundation raises funds, concern Holding authors accountable for how others use their code is violation of free speech, the CFTC decision is now in effect. This could be bad news for creators of trading assets on decentralized exchanges that are considered securities. “His DeFi and DAO code on GitHub is definitely First Amendment protected language,” Byrne says. “Developers get into trouble when they start doing more than that, like holding large token balances or manipulating the outcome of governance votes.”

Following a strategy adopted by many cryptocurrency projects, the then-unidentified creator of EthereumMax published a white paper detailing his vision for the currency. Unlike most white papers, the authors were only identified as “a group of crypto enthusiasts, investors, developers and marketers”. The paper, dated October 2021, uses an academic format that seems to thinly veil a marketing scheme, suggesting that so-called meme tokens designed to draw attention to ideas have worked well in the marketplace. I express my surprise that I did not.

According to the white paper, “I couldn’t understand why these large meme communities were not supporting serious crypto projects.” Was it a lack of marketing? Was the concept of real utility too complicated? Isn’t it exciting enough? Was the project irrelevant to the average person?” Below are nearly 50 pages that attempt to answer these questions.

In particular, in the disclaimer at the top of the white paper, the author claims that the document was reviewed by ICOLAW (a law firm in Los Angeles, PC) and does not vouch for “the accuracy of the white paper.” . forbes I tried to contact ICOLAW Package Compliance, which is part of LA-based Shumaker Mallory LLP, to see if that was involved, but have not heard back.

Additionally, Kardashian, Mayweather, and Pierce were sued in a class action lawsuit filed in January in U.S. District Court for the Central District of California, accused of helping Ethereum Max artificially inflate the price of its tokens. This fact has the potential to have further implications. The “executive defendants” in this lawsuit, who appear to be the person the plaintiff believes he created Ethereum Max, are named Steve Gentile, Giovanni Perone, and Justin French, but none have responded. . forbesRequest for comments. The law firm representing the plaintiffs, Scott+Scott, also declined to comment.

Kardashian was included in the SEC charges that were settled today, but Mayweather and Pierce were not, opening further doors to further repercussions. Without pleading guilty or denying guilt, it settled the SEC indictment, claiming it was paid to facilitate an initial coin offering (ICO) in which blockchain-issued assets were sold.

“Most DEX systems, especially those on Ethereum, rely to some degree on a centralized infrastructure to operate. They run web servers somewhere to make things easier for users,” says Byrne. says Mr. “These clear-cut points are where we expect the regulatory hammer to drop first and hardest.”

Despite EthereumMax dropping more than 90% from its highs and many describing it as a pump-and-dump scheme, the asset site’s roadmap claims to be a work in progress and the NFT marketplace’s Plan for this month.

https://www.forbes.com/sites/michaeldelcastillo/2022/10/04/kim-kardashians-1-million-fine-could-impact-uniswap-sushiswap-and-other-decentralized-exchanges/ Kim Kardashian’s $1 million fine could affect Uniswap, SushiSwap and other decentralized exchanges

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