The celebrities are accused of pumping up the crypto before dumping assets ahead of a major selloff.
Celebrity Kim Kardashian and athletes Floyd Mayweather and Paul Pierce were named in a lawsuit for allegedly scamming their followers into investing in a cryptocurrency called EthereumMax.
EMAX generated buzz last summer thanks in part to social media endorsements from celebrities like Kardashian and Mayweather, peaking at $10.55 in September. But now the cryptocurrency is trading at $1.50 as the bottom has fallen out.
The lawsuit, according to classaction.org, alleges that the defendants propped the crypto up as a way to “instill trust” in investors all while disguising their control over a “significant portion” of the total EMAX assets available for public trade.
The lawsuit names the trio of celebrities along with EthereumMax executives Steve Gentile, Giovanni Perone and Justin French as defendants. It also names an anonymous Defendant X.
The lawsuit alleges that while regular investors bought EMAX coins, the defendants were offloading their own assets in exchange for profits it what is known in Wall Street circles as a “pump and dump” scheme.
A request for comment from attorney John Jasnoch of Scott + Scott Attorneys at Law, who filed the lawsuit on behalf of a person in New York, was not immediately returned.
The lawsuit is for people who purchased tokens from May 14 to June 27, 2021.
On June 14, Kardashian Kardashian’s 250 million followers on Instagram saw an ad from her stating “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. Swipe up to join the e-max community,” according to The Hollywood Reporter.
“When she was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by ’joining the Ethereum Max Community‘, it may have been the financial promotion with the single biggest audience reach in history,” Charles Randell, chair of the FCA and PSR said to the Cambridge International Symposium of Economic Crime last year.
“In line with Instagram’s rules, she disclosed that this was an #AD. But she didn’t have to disclose that Ethereum Max – not to be confused with Ethereum – was a speculative digital token created a month before by unknown developers,” Randell said.
