EthereumMax (EMAX) is not connected to Ethereum, the second-largest cryptocurrency by market capitalization, despite the name. Instead, it is a token built on top of the Ethereum blockchain (Nelson). Like many cryptocurrencies, EMAX promises to reshape the financial landscape, promoting itself with exaggerated claims. The project’s white paper ambitiously described its vision of a “robust and scalable ecosystem” powered by decentralized finance (DeFi). The origins of EMAX trace back to the depths of the COVID-19 pandemic, where its founders—dedicated crypto enthusiasts—developed the token with high hopes of success (EthereumMax Whitepaper). EMAX was marketed not only as a financial asset but as a “culture token” that offered exclusive benefits. Holders of EMAX tokens were promised “special access” to elite restaurants and clubs, while the white paper described future plans for EMAX-linked exchanges, NFT marketplaces, and other platforms to deliver value to holders. 

In January 2022, a class action lawsuit was filed against Kardashian and other celebrities, including boxer Floyd Mayweather and basketball player Paul Pierce, along with the founders of EthereumMax (Picciotto). The lawsuit claimed these individuals misled followers by promoting EMAX tokens in a way that inflated its value, only to leave investors with significant losses. This strategy is known as a "pump and dump" scheme.  Pump-and-dump schemes are especially common in new markets, such as cryptocurrency, where projects or tokens are promoted more on narrative appeal than actual value (Garnett). EMAX is an example of a token launched early in the crypto boom, targeting investors unfamiliar with its risks. These types of schemes can cause significant financial damage, leaving many investors with substantial losses once the price crashes. The lawsuit further alleged that the promotional posts violated federal securities laws, specifically the Securities Act of 1933. This act mandates full disclosure when individuals are paid to promote investment products. Under Section 17(b) of the Act, it is illegal to promote or advertise securities without clearly stating any financial compensation received (Securities Act of 1933, sec. 17(b)). Kardashian’s failure to disclose the $250,000 payment in detail was seen as a violation of this law. The EthereumMax case is a critical example of how the lack of transparency in influencer marketing can mislead consumers and create regulatory risks for influencers. 

Blockchain is a decentralized digital ledger that records transactions in a way that is secure, transparent, and permanent. Every transaction on a blockchain is publicly accessible and cannot be altered, which can help promote honesty in marketing campaigns (IBM). Using blockchain in influencer marketing offers several key advantages. Payments made in cryptocurrency are recorded on the blockchain, providing a transparent trail that shows whether an influencer was paid for a promotion. This eliminates the risk of hidden payments and ensures consumers know when influencers are financially incentivized. Smart contracts are self-executing agreements that enforce specific conditions. For instance, a brand could use a smart contract to ensure payment to an influencer only if they include full disclosure in their posts. This would automate transparency, reducing the risk of non-compliance. Blockchain’s permanent transaction history makes it easier for regulators and consumers to track financial relationships between influencers and brands. This could serve as a safeguard against misleading promotions, as all payment data would be available for public scrutiny.

While blockchain can improve transparency, its adoption faces several challenges. For starters, many influencers and brands may not fully understand how blockchain works, making it difficult to implement at scale. Additionally, most consumers are not yet familiar with tracking transactions on a blockchain, which could limit the immediate impact of such transparency measures. Regulations around crypto promotions are also still evolving. Governments are working to develop clearer rules to protect consumers from fraudulent promotions while allowing legitimate marketing practices to continue. As seen in the Kardashian case, the Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC) are beginning to crack down on influencers who fail to properly disclose paid partnerships involving financial products. Moving forward, regulations may require stricter disclosures, potentially integrating blockchain-based systems to verify compliance.

The EthereumMax case with Kim Kardashian shows how important transparency is in cryptocurrency promotions, especially when influencers are involved. Blockchain technology could help by making payments and partnerships more open and easy to track. Tools like smart contracts and public records could prevent misleading endorsements and build trust with consumers. However, using blockchain in influencer marketing comes with challenges, like technical difficulties and a lack of public understanding. As new rules are developed, it will be important to protect consumers without stopping innovation. In the end, combining blockchain with fair regulations can create a marketing space where brands, influencers, and consumers all benefit from greater honesty and accountability

Works Cited 

Garnett, Allie Grace. Encyclopædia Britannica. Encyclopædia Britannica, Inc., www.britannica.com/money/pump-and-dump-schemes. Accessed 14 Oct. 2024.

IBM. “What Is Blockchain?” IBM, 28 Aug. 2024, www.ibm.com/topics/blockchain. Accessed 23 Oct. 2024.

Nelson, Danny. “What Is EthereumMax? Inside the Crypto Kim Kardashian Lost $1.2m Promoting.” CoinDesk, 9 May 2023, www.coindesk.com/business/2022/10/03/what-is-ethereummax-inside-the-crypto-kim-kardashian-lost-12m-promoting/. Accessed 14 Oct. 2024.

Picciotto, Rebecca. “Federal Judge Dismisses Crypto Scam Lawsuit against Kim Kardashian, Floyd Mayweather Jr..” CNBC, 8 Dec. 2022, www.cnbc.com/2022/12/07/kim-kardashian-floyd-mayweather-crypto-scam-lawsuit-dismissed.html#:~:text=A%20federal%20judge%20on%20Wednesday,the%20cryptocurrency%20on%20social%20media. Accessed 13 Oct. 2024. 

Securities Act of 1933. U.S. Government Publishing Office, 1933, https://www.govinfo.gov/content/pkg/COMPS-1884/pdf/COMPS-1884.pdf.

“SEC Charges Kim Kardashian for Unlawfully Touting Crypto Security.” U.S. Securities and Exchange Commission, 3 Oct. 2022, www.sec.gov/newsroom/press-releases/2022-183. Accessed 12 Oct. 2024.

EthereumMax Whitepaper. EthereumMax, 2021, www.ethereummax.org/whitepaper.

Getting Ready for your Final

Choose your groups (4 per group)

Choose your use-case (Report to me what's your use-case what ecosystem you will be working with by September 23rd)

1. Presentation on Use-Case Proposal (5 minutes)

2. Write up on Use-Case Proposal (4 – 6 pages)

3. Can include images and diagrams

4. Make sure it’s detailed enough, there isn’t a strict rule on the page requirement if it’s can capture the proposal properly

5. All write ups are due on December 9th

6. Presentations will be delivered on December 9th and December 11th

• What problem is it solving?

• Why is this problem important?

• What is the solution?

• Include both, 1 sentence pitch on solution and detailed explanation of the solution

• Who is it helping? Target Market

• Monetization Model

• How will the solution be built?

• Use diagram and explain what type of technologies will be used

• Why does this need to built today?

Below are a few suggestions, there are more options feel free to chose outside these options.

Example of use cases, these are use cases that have gone through grant processes. There is no requirement to build the actual solution. You will just be creating a proposal of what that solution is. So take these example as rough guidance.

• Lido (Doctors w/o Borders): https://research.lido.fi/t/innovation-grant-request-ngo-doctors-without-borders-medecins-sans-frontieres-msf/8268

• Mina (Cryptographic Proof of NFT Endorsement): https://github.com/racampos/cpone

• The Graph (Already Funded & Built -> Impact Market): https://www.impactmarket.com/

• Aptos (Already Funded & Built -> Merkle Trade): https://merkle.trade/

DApps and blockchain networks have an incentive for you to create use cases that use their platform

• Provide Grants

• Have communities on Discord, in-person, making it easier for you to connect with an individual that can help you in your project and potentially in your career

Anytime before October 30th, please fill out your intended presentation or write date beforehand in this the Midterm Project Google sheet (you should have gotten an email, if not let me know).

The presentation should be roughly 5 minutes and the write up should be roughly 1 page. They don't have to be these exact times or lengths as long as you convey your message clearly within this time.

https://uofi.box.com/s/ebl4f92n98a0xnquq6ihwbcos0f80e3x

It's 20% of your grade

In the Google Sheet 'Midterm Topic' that was emailed to you.

If you get an 85 or above in the assignment, I will share your work on our blog or can post your presentation (only if you choose to share it).

A typical transaction in Ethereum requires the following:

Nonce: A unique number that serves as a transaction count for the sender's address.

• Ensures that each transaction is only processed once and in order. The nonce prevents double-spending by making sure each transaction is unique.

Gas Price: The amount of Ether the sender is willing to pay per unit of gas (measured in wei).

• Incentivizes miners to include the transaction in a block. The higher the gas price, the more likely miners are to prioritize the transaction.

Gas Limit: The maximum amount of gas units that the sender is willing to use for the transaction.

• Sets a cap on how much computational work (and thus cost) the transaction can consume. It also protects against inadvertently sending transactions that could exhaust the sender’s balance.

To Address: The recipient address of the transaction. It could be an external account or a smart contract address.

• Specifies where the funds or the call data should be sent. If deploying a new contract, this field is typically empty.

Amount Value: The amount of Ether (in wei) to send to the recipient address.

• Transfers value from the sender's account to the recipient's account. This field is set to zero when the transaction does not involve a transfer of Ether.

Data: A field containing optional data. This can be empty, contain a contract deployment bytecode, or contain the encoded function call and parameters for a smart contract.

• Allows interaction with smart contracts, either by deploying a new contract or invoking functions on an existing contract.

v, r, s (Signature Components): Components of the transaction signature.

• v: Recovery id that helps identify which chain the transaction is meant for and the version of the signature.

• r and s: Cryptographic signatures generated from the sender’s private key.

• Provides cryptographic proof that the transaction was authorized by the owner of the sender's address. This ensures the integrity and authenticity of the transaction.

Transactions can do the following:

• Transfer Ether between accounts.

• Deploy a new smart contract.

• Interact with an existing smart contract.

We're only going to cover the first one, transfering Ether between accounts.

It's always nice to be on the recieving end of funds, there's transaction building and of course you're recieving funds.

All you have to do is provide the address of your wallet, you can either share the QR code or copy the address.

Note: When we're starting out in Testnet we'll fund our wallet using a Faucet in the testnet network, the faucet provides free test cryptos.

There are quite a few faucets, but Alchemy (https://www.alchemy.com/faucets/) seems to be most reliable one, but you will need to create an account them to use their faucet. After you choose your network, we're using Sepolia Test network (the Ethereum test network changes every so often) and you prove you're a human you can paste in your wallet address and recieve funds.

Luckily our Wallet takes care of filling out most of the details for a transaction, we just have to provide a to address and amount, if we want to make specific changes we can but for this post we'll keep it simple.

Switching Networks

We're not sending real funds, just testnet so it's important to make sure we are switching the network on our wallet.

On the left hand side of your wallet select the little logo of the network and it will take you to this page. Here you will select 'Show test networks' and then select 'Sepolia'. After you're done exit out of this window.

Sending Funds

1. Hit the 'Send' button in your Metamask browser extension

2. Enter the amount you want to transfer and the address the funds are being sent to and hit continue.

   Note!!!!: Before you continue please double check that the address belongs to person or organization you're sending funds to. Sometimes you can also verify if an address doesn't belong to a scammer by entering it here https://ethscamcheck.io/ (But this is also not always up to date).

   

3. You will see all the transaction details along with the gas (transaction) fees. Depending on the network's activity and amount the fees can vary. Now you need to confirm the transaction with the estimated gas and network fee.

   

4. After you confirm the transaction is sent for validation. If you see a speed up button that means your transaction hasn't been picked up by a validator and they need a "tip" (extra ETH as an incentive to pick it up).

5. Once you see the status as 'Confirmed' then you know the transaction is in the network and the transaction is ready to be verified.

This is the most important step, after you transaction is submitted you will get a transaction ID. When you click on the transaction you will see all the details about the transaction, this is your receipt.

When you 'Copy Transaction ID' you will get to see the details on a Ethereum Network Explorer like Etherscan or whatever your preference is. You can also also just select 'View on block explorer' and it should take you to Etherscan so you can check that your transaction actually went to the address you sent it to.

Note: If you're a decent being, you should always send the transaction ID after the transaction is submitted so both parties are aware of the status of the transaction.

1. Fund your wallet with Testnet ETH

2. Send 0.0001 to our class wallet 0x6836684527E29572A855fEf7348637bE8d972BB7

3. Email me the transaction ID and the Block number it was mined in

1. Visit the official MetaMask website (https://metamask.io/) either using a Firefox or Chrome browser and click on the "Download" button. 2. Choose the appropriate browser extension: Select your browser (Chrome, Firefox, Brave, or Edge) and follow the prompts to install the MetaMask extension. 3. Open the MetaMask extension: Once installed, click on the MetaMask icon in the extensions area of your browser. 4. Create a new wallet: Click on "Get Started" and then "Create a Wallet." 5. Agree or decline data sharing: You may be presented with a prompt regarding data sharing; choose your preference. 6. Set a strong password: Create a secure password that you will use to access your MetaMask wallet. 7. Secure your recovery phrase: MetaMask will generate a 12-word recovery phrase for you. Write it down and store it in a safe place. This is critical for recovering your wallet if you lose access. 8. Confirm your recovery phrase: You will be asked to confirm your recovery phrase by selecting the words in the correct order to complete the setup process. 9. Complete the setup: After successfully confirming your recovery phrase, your MetaMask wallet will be ready. 10. Fund your wallet: You can now fund your MetaMask wallet by purchasing Ethereum or other cryptocurrencies directly, transferring from another wallet, or using a decentralized exchange. 11. Manage your wallet securely: Regularly update your password and keep your recovery phrase secured. Enable any additional security settings such as biometric authentication if applicable. 12. Explore and connect: You can connect your MetaMask wallet to various decentralized applications (dApps) to start using your crypto.

1. Email me your wallet address with your full name

To ensure a positive and productive experience for everyone, please adhere to the following guidelines:

• Respect Others: Always be courteous and respectful. Avoid using language that could be interpreted as offensive, derogatory, or inflammatory.

• Maintain Professionalism: This blog is an extension of our academic environment. Keep your content professional, using appropriate language and tone.

• Protect Personal Information: Do not share personal information about yourself or others that could lead to privacy concerns. This includes full names, addresses, or any sensitive details.

• Respect Confidentiality: Refrain from discussing confidential information that is not intended for public disclosure.

• Stay On-Topic: Make sure your posts are relevant to the course content or the discussion topics provided. Off-topic posts can distract from the learning experience.

• Add Value: Aim to contribute posts that provide value to the readers. This could include well-thought-out arguments, insightful reflections, or constructive critiques.

• Avoid Plagiarism: Ensure that all the content you post is original. If you reference ideas or content from others, provide proper attribution.

• Be Honest: Share your own thoughts and opinions authentically. Do not misrepresent facts or spread misinformation.

Email moza2@uic.edu to be added as a contributor to this blog, you will need to provide your wallet address since this is a decentralized blogging platform.