Kim Kardashian and former boxing champion Floyd Mayweather Jr. are accused of collaborating to artificially increase the price of cryptocurrency and a lawsuit has been filed in federal court in Los Angeles.
Specifically, they are accused of jointly misleading citizens by encouraging them to invest in “speculative digital currency of unknown origin.”
The two were allegedly paid a substantial amount of money to advertise and promote through their personal accounts, primarily on Instagram, Ethereum Max, a cryptocurrency created just a few weeks ago.
The lawsuit accuses both Ethereum Max and the two aforementioned individuals of colluding to artificially increase the price of the cryptocurrency by making “false or misleading statements” in their posts.
Kim Kardashian has more than 278 million followers on Instagram alone.
However, “the digital currency in question, named, EthereumMax, has no connection to the second-largest cryptocurrency, Ethereum,” the complaint states, among other things.
“Are you guys into cryptos?” wrote Kardashian, in an earlier post promoting EthereumMax. “This is not about financial advice, but to share what my friends have told me about the Ethereum Max token!”
Additionally, and based on what CNBC reports, she included the hashtag #ad in the post, which she was paid to do. For now, however, it is unclear how much money she received from EthereumMax, however, estimates indicate a fee per sponsored Instagram post, ranging from $500,000 to $1 million.
As for Mayweather, he allegedly promoted the cryptocurrency in his fight against YouTube star Logan Paul. Specifically, interested parties could pay for tickets to the fight with EthereumMax, which skyrocketed its price, as noted in the lawsuit.
Also, the boxer promoted EthereumMax at a major bitcoin conference in Miami, resulting in him being disapproved. The boxer does not appear to have disclosed how much money he got for promoting the cryptocurrency, the lawsuit said.
The class action was initiated by Ryan Hugelrich who, together with other investors, bought the cryptocurrency between 14 May and 17 June 2021.
EthereumMax has lost about 97% of its value since the beginning of June. It is worth noting that EthereumMax has nothing to do with Ethereum, the second-largest cryptocurrency in the relevant market, as noted in the lawsuit.
Serial Shillers?
This is not the first time Kardashian and Mayweather have been targeted by regulators for promoting cryptocurrencies.
In 2018, Floyd Mayweather was accused by the US Securities and Exchange Commission (SEC) of “inflating” an ICO (initial cryptocurrency offering). He then paid a $600,000 settlement with the SEC without admitting or denying the allegations.
In September 2021, Charles Randell, chairman of the UK Financial Conduct Authority (FCA), referred to the EthereumMax advertisement on Kim Kardashian’s Instagram in a speech warning of cryptocurrency scams.
