A class action against EthereumMax and its promoters has named reality star Kim Kardashian, boxer Floyd Mayweather Jr. and former NBA player Paul Pierce among the defendants.
Plaintiff Ryan Huegrich brought the suit on behalf of all investors who purchased EthereumMax, or EMAX, tokens between May 14 and June 17 of 2021. The case alleges EthereumMax executives and promoters made false or misleading statements through social media advertisements and other promotional efforts.
Huegrich claims the executives obscured their control over the tokens, as well as what percentage were available for public trading during the May to June timeline, in order to pump the price and sell their own portions of EMAX at a profit. They pumped the price by driving interest in the token through celebrity endorsements, including those of Kardashian, Mayweather Jr. and Pierce according to the complaint.
"In plain terms, EthereumMax’s entire business model relies on using constant marketing and promotional activities, often from “trusted” celebrities, to dupe potential investors into trusting the financial opportunities available with EMAX Tokens," said the complaint.
The UK's Financial Conduct Authority chair, Charles Randell, expressed his concern over Kardashian's EMAX promotions in September 2021, saying it was imperative that crypto regulations cover paid-for advertising on online platforms.
EMAX tokens are ERC-20 tokens based on the Ethereum blockchain, but have no other connection to Ethereum itself, according to the case. The case alleges the name is another obfuscation by the EthereumMax defendants to dupe investors into believing they had deeper ties to the Ethereum network.
"It would be akin to marketing a restaurant as “McDonald’sMax” when it had no affiliation with McDonald’s other than the name similarity and the fact that both companies sell food products," argued the complaint.