Celebrity and socialite Kim Kardashian and retired professional boxer Floyd Mayweather have been named as defendants in a lawsuit over a crypto scam. The two, along with former NBA star Paul Pierce, are being sued over allegations that they misled investors over a cryptocurrency scam associated with the EthereumMax token. The token has a price of $0.00000001904 though it had reached an all-time high price of $0.0000008546 last year in May.
What is the lawsuit about?
A class action lawsuit filed in the US District Court for the Central District of California states that the stars, along with the developers of EthereumMax, conspired to artificially increase the price of the token before selling it off and crashing the price. These types of pump and dump scams are common in the crypto world.
All three named in the lawsuit promoted the token in various ways and instances on social media. Additionally, the name of the token, EthereumMax, suggests a connection to the second most popular token Ether and its blockchain Ethereum but the EtheureumMax token has no connection to the former two. The token was only around for less than a few months when the celebrities had made their endorsements.
What did the celebrities do?
Kardashian had shared a post on her Instagram account, which is followed by 250 million individuals, about the token.
“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,” Kardashian had posted.
She had tagged the post with the hashtag ‘ad’ and estimates indicate that Kardashian could have earned anywhere between $500,000 and $1 million based on her fee for promoting products on her social media platform.
Mayweather has promoted the token multiple times in the past. He had promoted the token during the Bitcoin 2021 Conference in Miami, and even accepted the token as payment for his boxing match with YouTuber Jake Paul.
Pierce promoted the EthereumMax token over multiple Twitter posts that had gone viral subsequently.
EthereumMax developers protest
The developers of EthereumMax token, however, have denied all allegations.
“The deceptive narrative associated with the recent allegations is riddled with misinformation about the EthereumMax project. We dispute the allegations & look forward to the truth coming out,” the Twitter account of the token posted.
“This project has prided itself on being one of the most transparent and communicative projects in the cryptocurrency space. We dispute the allegations and look forward to the truth coming out,” a spokesperson told CNBC.
Celebrities and others have been criticised for promoting cryptocurrency tokens, among other crypto assets, to their millions of followers.
Charles Randell, Chair of the UK's Financial Conduct Authority, had criticised Kardashian for her association with the EthereumMax token during a speech at Cambridge International Symposium on Economic Crime last year.
"There is no shortage of stories of people who have lost savings by being lured into the cryptobubble with delusions of quick riches, sometimes after listening to their favourite influencers, ready to betray their fans' trust for a fee," said Randell.
(Edited by : Shoma Bhattacharjee)