Kim Kardashian and boxer Floyd Mayweather have both been sued by a group of cryptocurrency investors for allegedly participating in a "pump and dump" scam by artificially inflating the price of the cryptocurrency EthereumMax.
As first reported by the Hollywood Reporter, EthereumMax's co-founders and celebrity promoters - including Kardashian and Mayweather - have been accused of promoting the cryptocurrency to their millions of followers and then selling for a profit.
Former NBA star Paul Pierce was also named as a defendant in the lawsuit.
"The misleading promotions and celebrity endorsements were able to artificially increase the interest in and price of the EMAX Tokens during the Relevant Period, causing investors to purchase these losing investments at inflated price," according to the lawsuit filed on Friday in California.
Kardashian waded into the crypto world last year by posting an advertisement for the little-known cryptocurrency to her more than 250 million followers on Instagram, a screen grab from the lawsuit shows.
"Are you guys into crypto????" the US socialite-turned-entrepreneur wrote in her Instagram story posted in June 2021.
"This is not financial advice but sharing what my friends just told me about the EthereumMax token!"
"A few minutes ago EthereumMax burned 400 trillion tokens - literally 50 per cent of their admin wallet giving back to the E-Max community."
Nineteen per cent of those who heard about Kardashian's post invested in Ethereum max, according to the lawsuit.
Kardashian's ad "may have been the financial promotion with the single biggest audience reach in history", said Charles Randell, head of the UK's financial watchdog, in a 2021 speech.
Mr Randell said influencers like Kardashian "are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation".
Former world champion boxer Floyd Mayweather promoted the cryptocurrency leading up to a fight with American YouTuber Logan Paul in June of last year. EthereumMax was accepted as a currency to purchase tickets to the hotly-anticipated event.
According to the lawsuit, those who used EMax tokens to purchase tickets over $5,000 would receive incentives including signed boxing gloves and ringside tickets.
Mayweather also promoted EthereumMax at a Bitcoin conference in Miami, Florida, where he and his entourage wore T-shirts with "EthereumMax" and its logo featured on the chest.
The company's website was also featured on the waistband of his shorts during the fight Paul.
EthereumMax has lost 98 per cent of its value since June.
The EMax token is a speculative digital currency created using the Ethereum blockchain by a group of cryptocurrency developers. The tokens are traded against Ethereum, the local currency in the Ethereum blockchain network.
