Kim Kardashian and Floyd Mayweather sued over an alleged Crypto Scam

Kim Kardashian and Floyd Mayweather being sued for raising the price of the crypto EthereumMax in a class action complaint. According to the lawsuit, the celebrities made "false or misleading comments" about the little-known token in social media posts. Since early June, EthereumMax has lost about 97 percent of its value, prompting some investors to term it a "pump and dump" scheme.

Kim Kardashian and Floyd Mayweather are being sued for allegedly misleading investors after they promoted EthereumMax, a little-known cryptocurrency, to their millions of social media followers.

EthereumMax and its celebrity promoters are accused of conspiring to artificially inflate the price of the token by making "false or misleading statements" in social media posts, according to a class action lawsuit filed last Friday in the United States District Court for the Central District of California.

Last year, Kardashian created a stir with an Instagram post endorsing the EthereumMax token. "Are you guys interested in crypto?" Kardashian asked her followers. She wrote, "This is not financial advice but sharing what my friends just told me about the Ethereum Max token!"

Kardashian's post featured the hashtag #ad, implying that she was paid to promote it. It's unclear how much Kardashian was paid by EthereumMax, although her cost per sponsored Instagram post has been estimated to be in the $500,000 to $1 million range.

Meanwhile, in his boxing battle with YouTube personality Logan Paul, Mayweather backed the token. The lawsuit says that accepting EthereumMax as payment for event tickets increased trading volumes dramatically.

Mayweather also spoke about EthereumMax at a large bitcoin conference in Miami, where he was booed off the stage. According to the lawsuit, Mayweather does not appear to have received any compensation for his marketing of the token.

The lawsuit argues that the celebrities' actions caused losses to plaintiff Ryan Huegerich, a New York resident, and other investors who purchased EthereumMax tokens between May 14, 2021, and June 17, 2021.

Since early June, EthereumMax has lost about 97 percent of its value, prompting some investors to term it a "pump and dump" operation, in which scammers try to inflate the price of an asset by making false or misleading assertions. In Huegerich's lawsuit, Kardashian and Mayweather are accused of "shilling" EthereumMax.

According to the lawsuit, EthereumMax "has no link" to ether, the second-largest cryptocurrency, and its branding appears to be an attempt to deceive investors into thinking the token is a part of the Ethereum network.

The EthereumMax project's spokesperson denied that it was running a fraud, claiming that the lawsuit was "riddled with misinformation."

The spokesperson said, "This project has prided itself on being one of the most transparent and communicative projects in the cryptocurrency space," the spokesperson said. "We dispute the allegations and look forward to the truth coming out."

It's not the first time celebrities have been chastised for endorsing cryptocurrency, much to the chagrin of regulators.

The Securities and Exchange Commission charged Mayweather with pushing an initial coin offering, a contentious crypto crowdfunding strategy, in 2018. Mayweather agreed to pay the SEC more than $600,000 in a settlement without admitting or rejecting the regulator's allegations.

In a speech warning against crypto frauds in September 2021, Charles Randell, chair of the United Kingdom's Financial Conduct Authority, pointed up Kardashian's Instagram ad for EthereumMax. Randell stated that he couldn't say whether EthereumMax was a fraud or not, "social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation."

Kim Kardashian charged by the SEC in cryptocurrency scam

Kim Kardashian is accused by the Securities and Exchange Commission of endorsing crypto on her Instagram profile without declaring the amount of compensation she received, the agency said on October 3.

According to the SEC, Kardashian has consented to comply with the agency's investigation and pay $1.26 million in fines to resolve the allegations. In a June 2021 tweet, Kardashian was paid $250,000 to promote EthereumMax (EMAX) tokens offered by EthereumMax to her dozens of millions of followers. With 330 million followers on Instagram as of right now, the celebrity's promotions are very effective.

According to the SEC, Kardashian also consented to refrain from promoting any cryptocurrency tokens for three years as part of the settlement. In a statement, Kardashian's attorney Patrick Gibbs said she was "pleased to have addressed this matter with the SEC."

The SEC has already targeted celebrities for failing to disclose earnings from promoting cryptocurrency. In November 2018, the agency settled legal claims made against boxing champion Floyd Mayweather and music producer DJ Khaled for endorsing several initial coin offerings (ICOs) without disclosing the compensation received for the sponsorships. In 2020, it resolved allegations against superstar Steven Seagal.