Cosmetics billionaire and Reality TV star Kim Kardashian and a host of other celebrities, including boxer Floyd Mayweather have landed themselves in a soup after promoting a dodgy altcoin in the summer of last year.
The celebrities, and the promoters of EthereumMAX, are now being sued for misleading investors by making false or misleading statements about the company and its tokens, which ended up with the promoters of the token making a tremendous amount of money while the investors made nothing.
The Beginning Of EthereumMAX
EthereumMAX was first noticed in early 2021 when it went on a significant bullish run, which was largely driven by celebrity endorsements from the likes of Kardashian, Mayweather, and basketball star Paul Pierce. All three were paid significant amounts to promote the dodgy cryptocurrency.
However, with no other value apart from celebrity backing, the value of the coin crashed shortly after, leaving investors with almost nothing and a worthless altcoin. Meanwhile, the founders of EthereumMAX made a significant chunk of money at the expense of their investors.
Pump And Dump Scheme
A class-action lawsuit was filed against the coin’s creators and celebrities who endorsed it. The lawsuit claimed that this activity was part of a pump-and-dump scheme. A pump-and-dump scheme is a classic ploy in the crypto space, where the value of an asset will be increased by artificial means. Once this is done, the promoters of the coin sell their assets secretly, making huge profits, following which the asset’s value crashes. Anybody who invested in EthereumMAX between 14th May 2021 and 27th June 2021 has been listed as a plaintiff.
Details Of The Lawsuit
The suit states that Mayweather and Pierce promoted the EthereumMAX token all through May last year. This led to the token’s value jumping significantly, a whopping 632%, to be precise. Kardashian started promoting the coin in June, just a day before the coin’s value fell through the floor. Kardashian put the following post on Instagram, actively promoting the coin to her over 250 million followers,
“ARE YOU GUYS INTO CRYPTO???? THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN!”’
Although Kardashian did put a disclaimer that the post was a paid promotion, it still read as a normal post. The lawsuit also cites a survey by Morning Consult, which shows that Kardashian’s endorsement of the coin had a significant impact on its value, with over 1 in 3 crypto owners viewing her post.
The EthereumMAX Crash
Only a day after her post promoting the altcoin, EthereumMAX crashed, its value plummeting by over 98%, as the coin dropped to a low of $0.000000017. The lawsuit states that the promoters of the coin sold off their tokens before their value dropped, a claim that is verifiable because they had not made their wallet addresses private.
A Burgeoning Problem
The problem of celebrities blatantly shilling dodgy altcoins has become a new headache for the crypto space. Several op-eds slammed the practice and stated that the trend could get out of hand if it already hasn’t. Kardashian’s Instagram post was also flagged by the head of Britain’s Financial Conduct Authority (FCA), who stated at the time,
“I can’t say whether this particular token is a scam. Social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.