Kim Kardashian and Floyd Mayweather are being sued for allegedly misleading investors after they promoted EthereumMax, a little-known cryptocurrency, to their millions of social media followers.
EthereumMax and its celebrity promoters are accused of conspiring to artificially inflate the token’s price through social media posts that contain “false or misleading statements.”
Last year, Kardashian caused a stir by promoting the EthereumMax token on Instagram. “Are you guys into crypto?” Kim K wrote. The Ethereum Max Token is a new cryptocurrency that was introduced by my friends.
It was marked #ad in the message, implying Kardashian was paid to promote it. However, her fee per sponsored Instagram post has been estimated to be between $500,000 and $1 million.
In a boxing match with YouTuber Logan Paul, Mayweather endorsed the token. The lawsuit claims that accepting EthereumMax as payment for event tickets increased trading volumes.
In Miami, Mayweather promoted EthereumMax and was booed off stage. The lawsuit claims Mayweather did not disclose payment for promoting the token.
The lawsuit claims that the celebrities’ actions caused losses to plaintiff Ryan Huegerich and other investors who bought EthereumMax tokens between May 14, 2021 and June 17, 2021.
A “pump and dump” scheme is one where scammers try to boost the price of an asset by making false or misleading statements. In Huegerich’s lawsuit, Kardashian and Mayweather are accused of “shilling” EthereumMax.
The lawsuit claims EthereumMax has “no connection” to ether, the second-largest cryptocurrency, and its branding appears to be an attempt to mislead investors.
Regulators have previously chastised celebrities for promoting cryptocurrency.
In 2018, Mayweather was charged with pumping an ICO, a controversial crypto crowdfunding method. Mayweather paid the SEC over $600,000 without admitting or denying the regulator’s findings.
In a speech about crypto scams in September 2021, Financial Conduct Authority chair Charles Randell singled out Kardashian’s Instagram ad for EthereumMax. While Randell couldn’t confirm EthereumMax was a scam, he said “scammers routinely pay social media influencers to pump and dump new tokens on the back of pure speculation.”