Celebrities Kim Kardashian, former NBA star Paul Pierce and boxer Floyd Mayweather used their fame to hype a new cryptocurrency as part of a larger scheme to defraud investors while earning money, claims a lawsuit filed in California.
Lawyers filed a class action lawsuit on January 7, alleging that the trio acted as celebrity backers for EthereumMax, or EMAX, which was presented to investors as a disruptive new cryptocurrency. But these recommendations were a ploy by the creators of EthereumMax to increase the price of the token, the complaint states.
The creators of the digital coin – Steve Gentile of Connecticut and Giovanni Perone of Florida ̵[ads1]1; then sold their holdings of EthereumMax “for significant profits,” according to the lawsuit. Gentile and Perone “marketed the EMAX tokens to investors so that they could sell their share of the float for a profit,” the lawsuit states.
EthereumMax denied the allegations in a statement to CBS MoneyWatch.
“The misleading narrative associated with the recent allegations is full of misinformation about the EthereumMax project,” a company spokesman said. “This project has been proud to be one of the most transparent and communicative projects in the cryptocurrency field. We dispute the allegations and look forward to the truth emerging.”
Representatives of Kardashian, Mayweather and Pierce did not respond to requests for comment.
A number of celebrities have designated cryptocurrencies. Among the high-profile figures who publicly support various digital coins: Matt Damon, Paris Hilton, Jamie Foxx, Ashton Kutcher, Gwyneth Paltrow and Dennis Cole, better known as Ghostface Killah from the Wu-Tang Clan.
To be sure, celebrities have been supporting a number of products for decades. But suing famous supporters has historically proved difficult because lawyers have to prove that the celebrity made money illegally.
The lawsuit, filed on behalf of New York investor Ryan Huegerich, does not say who Gentile and Perone sold EthereumMax to or for how much. The complaint also does not say whether Kardashian, Mayweather and Pierce earned on their holdings in the crypto.
Nevertheless, Huegerich’s lawyers claim that EMAX was a “pump and dump scam”, with celebrities used to promote the token to increase the price, after which Gentile and Perone dumped their holdings.
EMAX was launched in May last year with an initial trading volume of $ 16.1 million, according to data from CoinMarketCap. The number grew after social media posts by Kardashian and Pierce as well as incentives from Mayweather – who signed boxing gloves, ringside tickets and discounts to those who bought match tickets online with EMAX tokens – the lawsuit claims. At one point, EMAX’s trading volume grew to nearly $ 108 million.
In a June Instagram post, Kardashian asked her more than 250 million followers, “Are you interested in crypto?”
“This is not financial advice, but sharing what my friends just told me about the Ethereum Max token,” it said in Kardashian’s post. “A few minutes ago, Ethereum Mac burned 400 trillion tokens – literally 50% of their administration wallet gives back to the entire E-max community.”
EthereumMax saw the price continue to rise a month later.
“But this meteoric rise did not last long, and EthereumMax began to be emptied immediately after Kardashian’s post,” court documents said. “On July 15, the price of the EMAX token reached its lowest all-time high: $ 0.000000017 per unit, a fall of 98% that it has not been able to recover from.”
EthereumMax traded at the same price of $ 0.000000017 on Wednesday.
Kardashian, Pierce, Mayweather, and the creators of EthereumMax are being sued for aiding and abetting, unfair enrichment, and other violations of California state laws. The lawsuit does not disclose how much money Huegerich invested in EthereumMax or how much he is seeking compensation.