Kim Kardashian is one of the three celebrities being sued by stakeholders in the EthereumMax crypto-currency. Other defendants are famed boxer Floyd Mayweather Jr, basketball player Paul Pierce, and the other currency makers. The lawsuit alleges these celebrities did collaborate with EthereumMax to “misleadingly promote and sell” the crypto-currency.
EthereumMax said, “We do not follow the allegations and look forward to the truth coming out.” Despite its name, EthereumMax has no legal, business, or formal connection with the crypto-currency Ethereum.
The legal action alleges EthereumMax worked out a “pump and dump” scheme – where misleading publicity is used to inflate the value of an asset and then sold to naive and unknowing investors at a profit.
The class action that was filed with the Central District Court of California claims the “company’s executives, collaborating with several celebrity promoters” made “false or misleading statements to investors about EthereumMax, through social-media advertisements and other promotional activities”.
The accused “touted” the capability of “investors to make significant returns”, it claims, resulting in a made-up increase in the value of the crypto-currency, “causing investors to purchase these losing investments at inflated prices” and, therefore, ruling in the working staff of EthereumMax being named in the class action to “sell their EMax tokens to investors for a profit”.
“In simple terms, EthereumMax’s whole business model relies on using consistent marketing and other promotional activities, generally from ‘trusted’ celebrities, to scam potential investors into trusting the financial opportunities,” the court filing states.
It also accuses former National Basketball Association (NBA) dribbler Mr. Pierce of publicizing EthereumMax in a “widely discussed” post on Twitter, in May 2021,” commending EthereumMax’s ability to mint money for him”.
At this same time, EthereumMax began to use former world champion Mr. Mayweather’s boxing match with YouTuber Logan Paul to publicize the crypto-currency.
Mr. Mayweather is alleged to have also promoted EthereumMax at some crypto-currency event.
Lastly, reality-TV star Kim Kardashian, the complaint claims, put out an Instagram post, writing: “This is not financial advice but sharing what my friends tell me about the EthereumMax token.”
The chairman of the UK’s Financial Conduct Authority, Charles Randell, later stated that Ms. Kardashian had “asked her 250 million followers to speculate on crypto tokens”, saying that the post – classified as an advertisement – might have been the “financial promotion with the single biggest audience reach in history”.
At this same time, EthereumMax said to BBC News its marketing and public-relations work “is always from an awareness perspective and not encouraging to purchase – as the Kim K post was simply intended to raise awareness of the project and its utility”.
“It is our intention that our marketing and PR efforts encourage people to research our project… before making a decision,” it said.
“This approach takes a lot of time, energy, and resources and is in stark contrast to the quick pump-and-dump schemes out there.”
Yet, this promotion caused the currency’s price to increase to over 1,300% more than its initial price before falling down to “an all-time low” just after a month or so after Ms. Kardashian’s post, the court filing alleges.