The reality TV star Kim Kardashian and boxing champion Floyd Mayweather Jr are among celebrities being sued over their promotion of an alleged “pump and dump” cryptocurrency scheme that investors say caused them to lose money.
According to a class action lawsuit filed in a California court, executives of EthereumMax, in collaboration with Kardashian, Mayweather Jr and the basketball player Paul Pierce, sought to enrich themselves by making “false and misleading” statements to investors.
Promotions by the company included an Instagram post to Kardashian’s 250 million followers that the head of the UK’s Financial Conduct Authority, Charles Randell, said may have had “the single biggest audience reach in history” for a financial product.
The value of the company’s EMAX tokens increased by as much as 1,370% after the media marketing blitz before crashing to an all-time low, the suit claims.
By using celebrity endorsements, the claimants say, EthereumMax’s executives, “touted the prospects of the company and the ability for investors to make significant returns due to the favourable ‘tokenomics’ of the EMAX Tokens”.
Instead, the lawsuit claims, they were concerned with inflating the value of their own tokens in order to sell them at a profit to investors who ended up holding artificially overvalued assets.
EthereumMax dismissed the allegations in a statement made via the company’s Twitter account.
“The deceptive narrative associated with the recent allegations is riddled with misinformation about the EthereumMax project,” it said. “We dispute the allegations and look forward to the truth coming out.”
EthereumMax previously told the BBC that Kardashian’s Instagram post was “simply intended to raise awareness of the project and its utility”.
Mayweather Jr is alleged to have promoted EthereumMax at a cryptocurrency conference while Pierce, nicknamed Truth, tweeted that the company had made money for him.
The Guardian has approached Kardashian, Mayweather Jr and Pierce for comment.