Kim Kardashian and Floyd Mayweather are being sued by investors for promoting dubious crypto currency EthereumMax.
A class action lawsuit filed last Friday in California’s District Court accuses EthereumMax and its celebrity promoters of artificially inflating the coin’s price through misleading social media posts in an alleged ‘pump and dump’ scheme.
The price of Ethereum Max crashed by 98 per cent after social media guru Kim Kardashian promoted it to her army of 228m Instagram followers.
The controversy began last year when Kim Kardashian made a social media post promoting the token.
“Are you guys into crypto????,” the reality TV star wrote. “This is not financial advice but sharing what my friends just told me about the Ethereum Max [sic] token!” The hashtag #ad was included in the post to suggest that the post was a paid advertisement.
Mayweather endorsed the token in a high profile boxing match with controversial Youtube influencer Logan Paul. The lawsuit alleges that the match helped to boost trading volumes for the coin sharply because EthereumMax was accepted as payment for tickets to the event.
The boxing champion has previously been involved in a crypto lawsuit and was charged by the US financial watchdog in 2018 for not disclosing a $100k payment he received for promoting an initial coin offering in 2017.
The news comes as the UK’s regulatory community takes steps to turn the screws on crypto. The UK’s advertising watchdog has banned crypto ads by Arsenal football club, Coinbase and Crypto.com among others for promoting digital assets to investors without making them aware of the risks.
Kim Kardashian was even name checked by the head of the Financial Conduct Authority for her role in promoting the coin and warned that a lack of regulation leaves investors vulnerable to crypto scams.
“Unfortunately, if a UK investor is lured into an investment promoted by an influencer that leads to losses, that investment is not protected,” commented Elizabeth Meade, Senior Associate at litigation specialist Cooke, Young and Keidan.
“The fact that the FCA does not have the remit to regulate the promotion of speculative tokens doesn’t mean that the promoters of these schemes can’t be held to account, but it will likely be more difficult. Investors may be able to recover their damages from those who promoted the scheme on the basis of the representations they made,” she added, noting that influencers could be deemed to have a duty of care to their followers.