American socialite Kim Kardashian and boxing legend Floyd Mayweather are facing a lawsuit for allegedly misleading their fans while promoting EthereumMax (EMAX), a little-known cryptocurrency.
A report unveiled this news earlier today, noting that investors filed a Class Action lawsuit in the US District Court for the Central District of California on January 7.
Reportedly, the lawsuit claims EthereumMax and its celebrity endorsers worked together to inflate the token’s price artificially through false and misleading statements in multiple social media posts. In Kardashian’s case, she made an Instagram post in June last year asking her 228 million followers whether they are into crypto.
She then wrote,
This is not financial advice but sharing what my friends told me about the Ethereum Max token!
Her post included the hashtag #ad, suggesting that she got paid for promoting the project. While it is not clear how much she made from the promotion, estimates place her rate per sponsored post between $500,000.00 (£366,202.50) and $1.00 million (£731,785.00).
On the other hand, Mayweather promoted the EMAX token in his match with Logan Paul. The event even accepted payments in EMAX. According to the lawsuit, the event’s support for EMAX payments helped increase the token’s trading volume.
The professional boxer also endorsed the token at a Bitcoin (BTC/USD) conference in Miami. However, the event’s attendees booed him off the stage. Like Kardashian, Mayweather did not disclose how much he got from the deal.
Investors claim EthereumMax was a pump and dump scheme
The lawsuit purports that plaintiff Ryan Huegerich, a New York resident, as well as other EMAX investors between May 14 and June 27, suffered losses due to the celebrities’ conduct. At the time of writing, EMAX is trading at $0.00000001753, denoting a 97% drop from its late-May and early-June levels.
With the coin losing such a massive amount of its value, some investors, including Huegerich, labelled it a pump and dump scheme. Specifically, Huegerich accused Kardashian and Mayweather of shilling EMAX.
The lawsuit pointed out that EMAX has no connection to Ethereum (ETH/USD), the second-largest cryptocurrency, adding that the branding only sought to dupe investors into believing the token is part of the Ethereum network.
In a statement, EthereumMax said,
The deceptive narrative associated with the recent allegations is riddled with misinformation about the EthereumMax project. We dispute the allegations and look forward to the truth coming out.
It is worth noting that Mayweather previously got into hot soup with the US Securities Exchange Commission (SEC) for promoting an initial coin offering (ICO) in 2018. The boxer paid over $600,000.00 (£438,387.00) in a settlement with the regulator without refuting or admitting the SEC’s findings.
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