Your favorite celebrities are, one by one, answering to the call of crypto, but that doesn’t mean you should always listen, or that they aren’t going to get in trouble. In a lawsuit filed last week, a host of big name stars, including Kim Kardashian, Floyd Mayweather Jr., and Paul Pierce, have been sued over their promotion of a cryptocurrency known as EthereumMax.
The suit alleges that a number of celebrities used their large online followings to promote “false or misleading information” while advertising what was “a speculative digital token created by a mysterious group of cryptocurrency developers.” In his highly publicized fight with Logan Paul, Mayweather wore a pair of boxing trunks sponsored by EthereumMax.org; Pierce boosted the coin on Twitter, claiming he made more money off of it than he did with ESPN amid a dispute with the sports network; and Kardashian posted on Instagram telling her followers to join the “Ethereum Max community.”
The endorsements were part of what the suit, which also includes the founders of EthereumMax as defendants, claims was essentially a “pump and dump scam,” in which the celebrities used their online influence to lure people into buying and inflating the dubious coin, before selling their shares after the price spiked. It also takes issue with the coin’s misleading name: “EthereumMax has no connection to the second-largest cryptocurrency, Ethereum,” a footnote in the filing reads. “It would be akin to marketing a restaurant as ‘McDonald’sMax’ when it had no affiliation with McDonald’s other than the name similarity and the fact that both companies sell food products.”
Kardashian’s celebrity endorsement of EtherumMax, otherwise known as EMAX, had already been called out as a red flag by a U.K. financial watchdog in September. “I can’t say whether this particular token is a scam, but social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation,” head of the U.K.’s Financial Conduct Authority Charles Randell said at a symposium. “ Some influencers promote coins that turn out simply not to exist at all.”
The class-action suit covers everyone who bought EMAX tokens between mid-May to late June. While none of the celebrities involved have publicly responded, a spokesperson for EMAX said, “The deceptive narrative associated with the recent allegations is riddled with misinformation.”
