Reality television star Kim Kardashian, who promoted a cryptocurrency token on her social media account last year, is being sued for “unjust enrichment” and “aiding and abetting” a pump-and-dump scheme.
A class action lawsuit filed last week in the U.S. District Court for the Central District of California accuses her and boxing champion Floyd Mayweather, among others, of making “false or misleading statements” to promote EthereumMax (EMAX), a token on the Ethereum network.
Kardashian and Mayweather representatives weren’t immediately available, CNBC reported. Developers of the token say the suit is “riddled with misinformation,” the financial news outlet said.
- Reality TV star Kim Kardashian and boxing champion Floyd Mayweather are among a slew of people being accused of participating in a “pump-and-dump” scheme for cryptocurrency token EthereumMax.
- The suit filed last week claims that a social media post made by Kardashian “artificially inflated” the price of EthereumMax while Mayweather wore branding at public appearances to promote the token.
- EthereumMax’s backers state that the suit is “riddled with misinformation.”
An EMAX Promotion
The EMAX token has a supply of two quadrillion. It dubs itself a “culture token,” and claims to function like a rewards card, handing out a percentage of the purchase amount back to the user for transactions conducted using the token. Launched in May 2021, the token was released without a whitepaper, an unofficial requirement in a crypto landscape full of scams. Crypto publications dismissed it as a marketing campaign. Developers have since released a whitepaper.
Kardashian made a post last year on popular social network Instagram touting the benefits of investing in EMAX. “Are you guys into crypto????” she wrote. “This is not financial advice but sharing what my friends just told me about the Ethereum Max token!” She added a hashtag #ad to make it clear that the post was not financial advice. The chair of the UK’s Financial Conduct Authority (FCA) called Kardashian’s post “the financial promotion with the single biggest audience reach in history” while speaking at a conference on token regulation.
Mayweather wore EMAX branding at assorted public appearances, including a Bitcoin conference, claiming that cryptocurrency was the “new wave” and “what everybody’s doing.” EMAX was also the official cryptocurrency accepted as payment for his match against YouTube star Logan Paul. Buyers, who purchased the match’s tickets using EMAX, were eligible for a 10% discount and could win ringside seats.
This is the second time that Mayweather has named in a crypto-related lawsuit. He was previously charged by the Securities and Exchange Commission (SEC) for failing to disclose payments he received to promote three initial coin offerings (ICO) on his social media account.
The suit contends that Kardashian and Mayweather’s promotions helped inflate the token’s price by inciting investors to it. “The misleading promotion and celebrity endorsements were able to artificially increase the interest in and the price of EMAX tokens during the Relevant Period, causing investors to purchase these losing investments at inflated prices,” the suit states.
An EthereumMax spokesperson disputed the charges. “This project has prided itself on being one of the most transparent and communicative projects in the cryptocurrency space,” the spokesperson told CNBC. “We dispute the allegations and look forward to the truth coming out.”
Much like other cryptocurrencies, EMAX has had a volatile price trajectory. According to the suit, EMAX has lost 98% of its value since June 2021, when Kardashian promoted it on her social media account.
Ryan Huegerich, based in New York, is named as plaintiff in the suit.