Investors in the EthereumMax cryptocurrency have sued three celebrities, including Kim Kardashian.
Boxer Floyd Mayweather Jr., basketball player Paul Pierce, and the currency’s inventors are among the other accused.
The celebrities are accused of working with EthereumMax to “misleadingly promote and sell” the cryptocurrency, according to the lawsuit.
EthereumMax has denied the charges and stated that it is looking forward to the truth being revealed.
EthereumMax, despite its name, has no legal or business ties to the Ethereum cryptocurrency.
EthereumMax is accused of operating a “pump and dump” operation, in which deceptive marketing is used to increase the price of an asset, which is subsequently sold to unknowing investors for a profit.
According to the lawsuit, the “company’s management, in collaboration with many celebrity promoters,” made “false or misleading assertions to investors about EthereumMax, through social-media commercials and other promotional activities.”
It claims that the defendants “touted” the ability of “investors to make significant returns,” resulting in an artificial increase in the price of the crypto-currency, “causing investors to purchase these losing investments at inflated prices,” allowing the executive staff of EthereumMax named in the legal action to “sell their EMax tokens to investors for a profit.”
“In plain terms,” the court petition claims, “EthereumMax’s whole business strategy relies on ongoing marketing and promotional efforts, frequently from ‘trusted’ celebrities, to deceive potential investors into trusting the financial prospects.”
It claims that Mr Pierce, a former NBA player, endorsed EthereumMax in a “widely publicized” Twitter post in May 2021, “praising EthereumMax’s capacity to produce money for him.”
At the same time, EthereumMax began to advertise the cryptocurrency by using former world champion Floyd Mayweather’s boxing battle with YouTuber Logan Paul.
At a cryptocurrency convention, Mr. Mayweather is believed to have endorsed EthereumMax.
Finally, the complaint claims that reality star Kim Kardashian posted on Instagram, writing, “This is not financial advise but sharing what my friends tell me about the EthereumMax token.”
Ms Kardashian “asked her 250 million followers to speculate on crypto tokens,” according to Charles Randell, the head of the UK’s Financial Conduct Authority, implying that the post, which was labeled as an advertisement, may have been the “financial promotion with the single largest audience reach in history.”
EthereumMax informed reporters at the time that its marketing and public-relations activities “are always from an awareness viewpoint and not urging to purchase – as the Kim K tweet was merely meant to create awareness of the project and its value.”
It stated, “It is our desire that our marketing and public relations initiatives encourage consumers to investigate our project… before making a choice.”
“In contrast to the rapid pump-and-dump techniques out there, our strategy requires a lot of time, work, and resources.”
However, the court filing claims that such promotion caused the currency’s value to rise to over 1,300 percent of its initial price before plummeting to “an all-time low” just over a month after Ms Kardashian’s post, allowing defendants to “offload” EthereumMax tokens “for substantial profits” while many of those who bought currency during this time lost money.
Those who invested between 14 May and 27 June 2021 and were “hurt thereby” are named as plaintiffs in the complaint.
The accusations were refuted by EthereumMax.
“The misleading narrative linked with the latest claims is replete with misinformation concerning the EthereumMax project,” Steve Gentile, listed in the lawsuit as the “co-founder/creator of EthereumMax,” told reporters.
“We deny the charges and eagerly await the truth to be revealed.”