Keeping Up

…with Kim and the SEC

Gm, everyone. Did you know: Egypt’s crypto transactions tripled over the past year because the country’s remittance market was destroyed by a falling Egyptian pound? Strange things happen when global financial markets are pushed to their limits. Maybe uncertainty isn't all bad.

Coming up today: The SEC sues Kim Kardashian, Japan embraces crypto to increase economic growth, and outages hit Solana and Coinbase.

—Angelina & Vincent

The SEC is Keeping Up Alright

We doubt Kris Jenner saw this coming when she penciled in her kids' biggest moves for 2022: Kim Kardashian faces scrutiny from the SEC for promoting crypto.

What happened: Last year, Kim touted the EthereumMax (EMAX) token to her 220 million followers over Instagram stories (the "financial promotion with the single biggest audience reach in history“, according to outgoing U.K. Financial Conduct Authority Chairman Charles Randell). On Monday, Kim settled with the SEC for failing to disclose a $250,000 payment she received for promoting EMAX. By settling, she agreed to…

  • Pay a $1.26 million fine

  • Not promote crypto assets for three years

  • Cooperate with the SEC in its ongoing investigation into EMAX violating securities law

Some context: Kim’s not the only celeb who advertised EMAX – Floyd Mayweather, along with a handful of other American influencers, also promoted the token. But the endorsement backfired, resulting in a lot of bad press and a class action lawsuit for Kim and Floyd.

EMAX dropped 99% in the months following her plug and looks a lot like a rug pull, tbh.

Big picture: Kim’s rendezvous with the SEC matters for two reasons:

  1. The SEC is probably going after Kim because it’s a fool-proof way to get into the headlines. And publicity matters, especially amid the SEC’s quarrel with the CFTC about who gets to regulate crypto.

  2. The SEC is sending a warning to influencers: Think twice before shilling crypto projects for personal profit (and be transparent about it).

Speaking of transparency: We’re left wondering what the SEC deems a sufficiently transparent disclosure of crypto promotions. Kim did label her EMAX post with #ad and prefaced with “this is not financial advice.”

–Angelina

Japan Wants To Use Crypto To Get Out of Low Growth Mode

REUTERS

Japan is ready to buy the dip. Not only is the country offering tax incentives for crypto companies, but now its Prime Minister Fumio Kishida has announced that Japan will invest in metaverse and NFT services.

Kishida’s approach is part of Japan’s broader effort to both digitize its economy and break out of an era of low interest rates. It’s also a stark contrast to the crypto crackdown for which Japan had once been known.

The regulatory history: Until 2016, Japan left crypto fairly unregulated. But after the Mt. Gox exchange was hacked in 2014 and lost 850,000 bitcoin (about $500 million at the time), Japan’s Financial Services Agency began enforcing a licensing regime for crypto exchanges. This regime became much tougher after another exchange hack in 2018, and crypto development in the country slowed significantly.

Despite strict regulation, some crypto exchanges have been eager to enter Japan to make good on attractive crypto yields. The Bank of Japan has kept interest rates negative since 2016 to try to boost economic growth in the nation, keeping yields on savings accounts low, especially in comparison to crypto.

Japan’s strategy: Get out of an economic growth rut, using crypto and its supporting industries as a tool to lift overall GDP.

–Vincent

Lights Out for Solana and Coinbase

Crypto started the month with a slew of high-profile outages.

  • Solana experienced its 12th outage of the year last Friday.

  • Coinbase users with U.S. bank accounts couldn’t make any transactions for six hours on Sunday.

Our take: Although crypto Twitter might disagree, the outages aren’t as apocalyptic as some threads might suggest.

For Solana, recent outages are nothing new—they simply point out shortcomings in the network that everyone already knows of.

And while Coinbase’s outage was undesirable, it’s not facing bankruptcy like *certain* other players. So stay calm, hodlers—even big TradFi banks experience the occasional outage.

–Angelina

In other news:

  • Bitcoin miners keep getting squeezed as the hashrate reaches an all-time high.

  • With Congress in recess, it’s unlikely that we’ll get any new U.S. crypto laws this year.

  • The European Union banned payments from Russia-linked crypto wallets.

  • South Korea has arrested a ‘key aide’ to Do Kwon.

  • Three Arrows Capital’s NFT collection is going to be sold soon.

And that’s what you need on your radar today in crypto. What other weird things are you seeing happening in the global crypto economy? Reply and let us know what you think is interesting! See ya on Sunday.