Kim Kardashian and Floyd Mayweather sued over alleged crypto scam

Kim Kardashian arrives for the 2018 Met Gala at the Metropolitan Museum of Art in New York on May 7, 2018.

Angela Weiss | AFP | Getty Images

Kim Kardashian and Floyd Mayweather are accused of misleading investors when they promoted a little-known cryptocurrency called EthereumMax to millions of social media followers.

The class-action lawsuit filed Friday in the U.S. District Court for the Central District of California alleges that EthereumMax and its celebrity promoters artificially inflated the price of the token by making “false or misleading statements” in social media posts.

Kardashian lead to uproar Last year, when she posted on Instagram to promote the EthereumMax token. “Do you guys like crypto????” Kardashian wrote. “This is not financial advice, but to share what my friend just told me about the Ethereum Max token!”

Kardashian added the hashtag #ad to the message, suggesting she was getting paid to promote it.It’s unclear how much EthereumMax paid Kardashian, although estimates have placed her in Cost per sponsored Instagram post Between $500,000 and $1 million.

Meanwhile, Mayweather endorsed the coin in a boxing match with YouTube star Logan Paul. EthereumMax was accepted as a payment method for event tickets, a move the lawsuit alleges dramatically increased transaction volume.

Mayweather also promoted EthereumMax at a major Bitcoin conference in Miami boo to step downMayweather does not appear to have disclosed how much he paid to promote the coin, the lawsuit said.

The lawsuit alleges that plaintiff New York resident Ryan Huegerich and other investors who purchased EthereumMax tokens between May 14, 2021 and June 17, 2021 suffered losses due to the actions of celebrities.

EthereumMax has lost about 97% of its value since the beginning of June, leading some investors to label it a “pump and dump” scheme, where scammers attempt to inflate the asset’s price through false or misleading representations. Features of allegations in Huegerich’s lawsuit accusing Kardashian and Mayweather of “shilling” Ethereum Max.

EthereumMax has “no ties” to the second-largest cryptocurrency, ether, the lawsuit said, adding that its branding appears to be designed to mislead investors into believing the token is part of the ethereum network.

When CNBC reached out to representatives for Kardashian and Mayweather, they were not immediately reached. EthereumMax did not respond to a request for comment on Twitter.

This isn’t the first time a celebrity has gotten into trouble for a cryptocurrency endorsement — which has regulators furious.

In 2018, the SEC charged Mayweather with launching an initial coin offering, a controversial method of crypto crowdfunding. Mayweather paid more than $600,000 in a settlement with the SEC without admitting or denying the regulator’s findings.

In September 2021, Charles Randell, chairman of the UK’s Financial Conduct Authority, made a special mention of Kardashian’s Instagram ad for EthereumMax in a speech on crypto scams. Randell said that while he can’t say whether EthereumMax is a scam, “social media influencers are often paid by scammers to help them pump and dump new coins in pure speculation.”