Kim Kardashian and Floyd Mayweather sued by investors over alleged cryptocurrency scams

Time:2022-01-12 Source: 765 views Trending Copy share

Kim Kardashian and Floyd Mayweather have been indicted for misleading investors when they promoted a little-known cryptocurrency, Ethereum Max, to millions of social media followers.

On Friday, a class-action lawsuit was filed in the U.S. District Court for the Central District of California, alleging that ethereum max and its celebrity promoters jointly artificially inflated the token’s price by making “false or misleading claims” in social media posts.

Kardashian caused a stir last year with a post on Instagram promoting the ethereum max token. "Are you guys interested in cryptocurrencies????" Kardashian wrote. “This is not financial advice, but sharing what my friends just told me about the Ethereum Max token!”

Kardashian added the hashtag #ad to the post, implying that she was paying for publicity. It's unclear how much Kardashian gets paid from EthereumMax, but estimates put her fees at between $500,000 and $1 million per Instagram sponsored post.

Meanwhile, Mayweather endorsed the coin during his boxing match with YouTube star Logan Paul. Ethereum Max was accepted as payment for tickets to the event, a move the lawsuit says significantly boosted transaction volumes.

Mayweather also promoted Ethereum Max at a major Bitcoin conference in Miami, only to be booed down. Mayweather does not appear to have disclosed the cost of promoting the token, the complaint said.

The lawsuit alleges that plaintiff Ryan Huegerich (a New York resident) and other investors who purchased Ethereum Max tokens between May 14, 2021 and June 17, 2021, suffered losses due to the actions of these celebrities.

Ethereum Max has lost about 97% of its value since the beginning of June, leading some investors to call it a “pump and dump” scheme, in which scammers attempt to inflate the asset’s price through false or misleading claims. The allegation is embodied in Huegerich's lawsuit accusing Kardashian and Mayweather of "shilling" the Ethereum max.

Ethereum max has "no ties" to the second-largest cryptocurrency, ether, the lawsuit said, adding that its brand appeared to be trying to mislead investors into believing the token was part of the ethereum network.

Representatives for Kardashian and Mayweather were not immediately reached by NBC Finance. Ethereum Max did not respond to a request for comment on Twitter. This isn't the first time a celebrity has gotten into trouble for a cryptocurrency endorsement -- which has regulators furious.

In 2018, Mayweather was charged by the SEC with conducting an initial coin offering, a controversial method of crowdfunding cryptocurrencies. Mayweather settled with the SEC without admitting or denying the SEC's findings, paying more than $600,000.

In September 2021, Charles Randall, chairman of the UK’s Financial Conduct Authority, warned about cryptocurrency scams in a speech, specifically mentioning Kardashian’s Instagram ad for Ethereum max. Randell said that while he can’t say whether Ethereum max is specifically a scam, “influencers on social media are often paid by scammers to help them dump new coins in pure speculation.”

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