Kim Kardashian, Floyd Mayweather, and Paul Pierce have all been sued for allegedly defrauding cryptocurrency investors.
Kim Kardashian, Floyd Mayweather, and basketball player Paul Pierce have been named as defendants in a class action lawsuit for marketing the cryptocurrency EthereumMax.
The lawsuit, which accuses the celebrities of deceiving their fans in a pump-and-dump scam, claims the celebrities persuaded their admirers to buy EthereumMax tokens only to sell them after their value had risen. According to the lawsuit, they were compensated in tokens for their endorsements then exited with huge gains, leaving investors holding the bag.
The lawsuit filed Friday in California federal court reads:
“Defendants touted the prospects of the Company and the ability for investors to make significant returns due to the favorable ‘tokenomics’ of the EMAX Tokens.”
“In truth, Defendants marketed the EMAX Tokens to investors so that they could sell their portion of the Float for a profit.”
John T. Jasnoch of Scott + Scott Attorneys at Law LLP filed the class action complaint on behalf of a New York individual, claiming to represent everyone who purchased tokens between May 14 and June 27, 2021.
The complaint highlights an allegedly deceptive business plan in which EthereumMax reportedly plotted with celebrities to falsely promote its token in the hopes that those who participated in the scam would be able to sell their shares after the token’s value was artificially inflated.
On June 14, Kardashian shared an advertisement for EthereumMax, which has no connection to the established cryptocurrency Ethereum, with her 250 million Instagram followers.
Kardashian’s post says:
“Are you guys into crypto???? This is not financial advice but sharing what my friends just told me about the Ethereum Max token! A few minutes ago Ethereum Max burned 400 trillion tokens—literally 50% of their admin wallet, giving back to the entire e-max community. Swipe up to join the e-max community.”
The post had a massive following, the lawsuit claims. Based on a survey conducted by financial services firm Morning Consult, up to 21% of all American people and nearly half of all cryptocurrency owners saw the advertisement, and 19% of those who saw it invested in EthereumMax as a result.
The post was the “financial promotion with the single biggest audience reach in history,” according to Charles Randall, chair of the Financial Conduct Authority in the United Kingdom.
According to the lawsuit, Mayweather and Pierce played comparable roles in the alleged scheme.
In a widely publicized statement on Twitter on May 26, former NBA star Pierce pushed EthereumMax amid a dispute with ESPN, where he used to work as an analyst. Pierce openly chastised ESPN, claiming that “made more money with this crypto in the past month then I did with y’all in a year.”
According to the lawsuit, EthereumMax stated on the same day that it was the only cryptocurrency accepted for online ticket purchases for Mayweather’s fight with Logan Paul. People who bought tickets with EMAX tokens were offered a variety of bonuses, including boxing gloves signed by Mayweather and the chance to attend the event.
Mayweather allegedly broke a 2018 settlement with the Securities and Exchange Commission by failing to disclose money he received for marketing a phony cryptocurrency, according to the lawsuit. Mayweather agreed to pay over $600,000 in penalties and not market any securities for three years as part of the arrangement.
Kardashian is also facing legal action for allegedly making false statements in commercial endorsements. In 2015, the US Food and Drug Administration ordered Kardashian to take down an ad for a morning sickness medication.
The case, which names EthereumMax executives, claims that the company violated state consumer protection laws, common law aiding and abetting statutes, and unjust enrichment laws. Its goal is to represent EthereumMax token purchasers between May 14 and June 27.