Kim Kardashian and Floyd Mayweather are being sued for artificially inflating the price of EthereumMax, a little-known cryptocurrency, by making misleading statements to their millions of social media followers.
Last year, Kardashian made news for promoting the cryptocurrency on her Instagram account. “Are you guys into crypto????” Kardashian wrote. “This is not financial advice but sharing what my friends just told me about the Ethereum Max token!”
The post included “#ad,” which indicated that she was paid a fee to post about the cryptocurrency.
Mayweather, meanwhile, endorsed EthereumMax during a boxing match with YouTube star Logan Paul. According to the class-action lawsuit, EthereumMax was accepted as a form of payment for the event’s tickets, which resulted in a significant increase in its trading volume. Later in June, Mayweather promoted the currency at the Bitcoin 2021 Conference in Miami, Florida, where he was booed off the stage.
Since then, the cryptocurrency has lost 97% of its value, prompting investors to call the promotion efforts a “pump and dump” scheme, where an asset’s price is boosted by making false or misleading statements.
According to the lawsuit, plaintiff Ryan Huegerich from New York and other investors who bought EthereumMax between May 14, 2021, and June 17, 2021, saw investment losses as a result of Kardashian’s and Mayweather’s promotion tactics.
This is not the first time celebrities have gotten into trouble for promoting cryptocurrencies. Mayweather, for one, was charged by the U.S. Securities and Exchange Commission for promoting an initial coin offering, which is a controversial crowdfunding method for cryptocurrencies. As a result, he had to pay $600,000 in a settlement to SEC.
Kardashian’s post also drew the ire of the U.K.’s Financial Conduct Authority. The regulator’s chairman, Charles Randell, called out her post to warn about crypto scams in September 2021. Randell noted that “social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation.”