A class action lawsuit named Kim Kardashian, Floyd Mayweather and the basketball star Paul Pierce as defendants for promoting a cryptocurrency called EthereumMax.
According to Finbold, the plaintiffs accused the celebrities and the as-yet-unidentified entities behind the tokens for make the value of Ethereum’s digital currency soar so that “they could sell their share of the Float for a profit.”
The lawsuit lists anyone who invested in the token between May 14 and June 27, 2021 as a defendant.
After value increase, the price plummets
As the specialized portal Engadget explains, the plaintiffs accuse the defendants of perpetrating a “pump and dump” scheme, in which investors sell their shares to earn a lot of money after orchestrating an increase in their value.
The lawsuit states that the coin increased 632% in value after Mayweather and Pierce promoted it: The boxing star wore shorts with the EthereumMax URL during his exhibition match with Logan Paul, while Pierce tweeted about it.
Meanwhile, Kardashian posted about EthereumMax on Instagram Stories, telling followers that she found out from her friends and linked to their website.
According to Morning Consult, 19% of respondents who said they heard of Kardiashian’s post invested in EthereumMax as a result.
The lawsuit states that the day after Kardashian’s release, the token’s value plummeted by 98%. Furthermore, the creators of the coin allegedly sold their shares before the price drop, as shown by their wallet activities.
Celebrities and cryptocurrencies
Celebrities have been promoting cryptocurrency tokens for a while and have even created their own.
This isn’t the first or last time they’ve been embroiled in controversies around a token: Mayweather, for example, was indicted by the Securities and Exchange Commission in 2018 for failing to disclose that he was paid $ 100,000 to promote Centra.
Two of Centra Tech’s founders were arrested for securities fraud and wire fraud, and the SEC charged them with “promoting non-existent relationships between Centra and known financial institutions” in an effort to entice people to invest in the ICO.