By Mike Bedigan, PA Los Angeles Correspondent
Kim Kardashian West and Floyd Mayweather are being sued for allegedly misleading fans over the purchase of crypto currency in a so-called “pump and dump” scheme.
Both celebrities are accused of using their wide fan bases to promote the purchase of EMAX tokens to “dupe” potential investors and increase the value of the currency.
A pump and dump scheme involves artificially raising the price of the currency through the spreading of misleading information or promotion before selling it off.
Documents obtained by the PA news agency show the value of the EMAX tokens, created by company EthereumMax, shot up in 2021 allegedly thanks to promotion by the influencers.
The legal action, brought by a New York man who lost investment after purchasing EMAX tokens, states: “The company’s executives, collaborating with several celebrity promoters, made false or misleading statements to investors about EthereumMax through social media advertisements and other promotional activities.
“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 prices.
“The executive defendants then conspired with the promoter defendants to sell their EMAX tokens to investors for a profit.”
Lawyers highlighted that the crypto-currency had been promoted in May ahead of Mayweather’s boxing match with YouTuber Logan Paul.
Various incentives were allegedly offered to those purchasing online tickets with EMAX tokens, including discounts, exclusive ringside seats and signed boxing gloves.
In June, Mayweather attended the Bitcoin 2021 conference in Miami where he and his entourage wore T-shirts with EthereumMax “emblazoned across the chest”, the legal action claimed.
It also referenced an online post made by reality star Kardashian West on June 14, 2021 which spiked interest in the company.
“Are you guys into crypto?” the 41-year-old said in her Instagram story.
“This is not financial advice but sharing what my friends just told me about the Ethereum Max Token.”
Lawyers said Kardashian West’s account, which has more than 250 million followers, “had tremendous reach”, with chair of the UK Financial Conduct Authority Charles Randall calling it “the financial promotion with the single biggest audience reach in history”.
The legal action was served to Kardashian, Mayweather and their co-defendants on January 10.