Hollywood celebrities have been chastised for promoting the divisive Ethereum Max coin. Kim Kardashian, Floyd Mayweather, and Paul Pierce have all used their social media platforms to promote what some have called a typical pump-and-dump scheme.
During the summer, the token that had surged in popularity during the summer had lost a large percentage of its value as a result of the anticipation generated by Hollywood celebs. Investors have filed a lawsuit against celebrities accusing them of purposefully inflating the price so they can dump their holdings.
Why were they accused?
Plaintiff claims that the Celebrity Defendants received EMAX Tokens and other forms of payment in exchange for their promotional posts. Plaintiff contends that the Celebrity Defendants failed to disclose that their endorsements were compensated. Plaintiff argues Mayweather and Pierce omitted any sort of disclosure, but Kardashian’s “#AD” declaration “tucked in the far bottom right of the post” was insufficiently visible.
According to Law360, Hollywood superstars Kim Kardashian, Floyd Mayweather, and Paul Pierce have been named as defendants in a lawsuit brought by a person who lost money after investing in bitcoin as a result of the celebrities’ advocacy and endorsement. The plaintiff, Huegerich, accused the defendants of misrepresenting the company as having bright prospects and large profit margins.
Huegerich, like most other investors who got into cryptocurrencies after following these celebrities, was left with almost worthless luggage after the token plunged over 70% from its all-time high. According to the plaintiff, the defendants identified in the complaint only promoted Ethereum Max (EMAX) to profit from the sale of their own tokens.
Plaintiff also argues that the Executive Defendants used the Celebrity Defendants’ publicity to falsely inflate interest in and the price of the EMAX Tokens, forcing investors to overpay for the digital assets. A month after these advertising operations, EMAX allegedly reported a 98 percent drop in sales.
With the FTC and NAD both focusing on the disclosure of substantial relationships (as we mentioned in our “On Notice” series), this class action case could provide one of the first glimpses into how these issues will be addressed in the cryptocurrency field.
Disclosure difficulties, in particular, may continue to arise in the cryptocurrency industry; by receiving bitcoin in exchange for their review, the endorser may be acquiring a share in the firm (rather than merely pay), which may not be evident from the context.
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Also read: White House preparing to regulate crypto for national security reasons
