Kim Kardashian, Floyd Mayweather, basketball player Paul Pierce are all under fire for using their platforms to promote the EthereumMax (EMAX) token. As stated in the class action complaint “This case arises from a scheme among various individuals in the cryptocurrency sector to misleadingly promote and sell the digital asset associated with EthereumMax (the EMAX Tokens) to unsuspecting investors.” The case essentially states that the defendants used their own influence as celebrities to artificially inflate the price of the token. From there, investors bought EMAX tokens at an inflated price. After this, supposedly the defendants involved then went and sold off their shares of the token, made a sizeable profit, and left investors to deal with their loses. The class action suit alleges that the influencers worked closely with the creators of EMAX to make false claims about the token in order to receive a profit.
Kardashian posted to more than 200 million followers on Instagram advertising the token. She states that “this is not financial advice” and proceeds to state information about a token burn, followed by some hashtags. One of the hashtags included is #ad, meaning it was a paid advertisement. Mayweather spoke on EthereumMax at a Bitcoin conference in Miami, where he was booed off stage. Also, during his boxing match with Logan Paul, he accepted EMAX as payment for the event, he also promoted the token through the match.
Interestingly enough, the same day that the announcement was made that payment in EMAX would be accepted for his Mayweather’s match, Paul Pierce made a statement on EMAX as well. He tweeted “I made more money with this crypto in the past month then I did with y’all in a year. TRUTH shall set u Free.” After that he puts a link to EtheremMax’s website.
Celebrities and cryptocurrency
In the last several months crypto has attracted a wide array of new investors who are eager to get into the space. Unfortunately, there is a learning curve and high potential to lose money, especially initially. Celebrities and influencers alike take advantage of this naivety for their own gain, as seen with this current class action suit. This won’t be the last time a pump and dump happens, and it certainly won’t be the last time a celebrity promotes a token. These schemes give regulators the fuel they need to continue to push unnecessary regulation on crypto. The community needs to do a better job at warning about these kinds of schemes, because they are prevalent and a real problem for cryptos growing community. Listening to an influencer is never a good idea when making investments, it is always safest to do your own research from many sources.