2 min read.Updated: 12 Jan 2022, 05:40 PM ISTTALAL ANSARI, The Wall Street Journal
Lawsuit alleges celebrities made false or misleading statements to investors about EthereumMax; company disputes allegations
Kim Kardashian, Floyd Mayweather Jr., and Paul Pierce are among a number of celebrities being sued for allegedly leading investors into a cryptocurrency “pump and dump" scam.
The celebrities and other defendants are accused of making “false or misleading statements to investors about EthereumMax through social media advertisements and other promotional activities," according to the class-action complaint filed last Friday in the U.S. District Court for the Central District of California. In addition to the three celebrities, defendants include the co-founders of the company and others.
The lawsuit alleges EthereumMax is a “speculative digital token created by a mysterious group of cryptocurrency developers." It says the celebrities told their millions of social-media followers to buy the cryptocurrency, only to sell when the price was inflated.
Ryan Huegerich, a New York resident, filed the complaint on behalf of himself and others who purchased EMAX tokens between May 14, 2021, and June 27, 2021, and lost money, according to the filing.
EthereumMax disputed the allegations. “The deceptive narrative associated with the recent allegations is riddled with misinformation," a company spokesman said.
Representatives for Ms. Kardashian and Messrs. Mayweather and Pierce didn’t immediately respond to requests for comment.
Mr. Mayweather promoted EthereumMax in 2021 when he was in a boxing match with YouTube celebrity Logan Paul. Former NBA player and sports commentator Paul Pierce promoted EthereumMax on his Twitter account during an unrelated conflict he was having with ESPN at the time.
“.@espn I don’t need you. I got @ethereum_max I made more money with this crypto in the past month then [sic] I did with y’all in a year," Mr. Pierce tweeted.
Ms. Kardashian promoted the cryptocurrency on Instagram, where she has 278 million followers. The reality TV star and entrepreneur’s 2021 post asking her followers on the platform to join “the Ethereum Max Community" prompted criticism from the U.K.’s financial watchdog.
Charles Randell, head of the U.K.’s Financial Conduct Authority, said in a speech in September that Ms. Kardashian’s post might “have been the financial promotion with the single biggest audience reach in history." He also criticized the disclosed ad, saying Ms. Kardashian wasn’t required to tell followers that EthereumMax was a month-old, speculative digital token.
“I can’t say whether this particular token is a scam," Mr. Randell told the Cambridge International Symposium on Economic Crime, according to a copy of his remarks posted online. “But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote coins that turn out simply not to exist at all."
A representative for EthereumMax said at the time that Ms. Kardashian’s “post was simply intended to raise awareness of the project and its utility."