The class action lawsuit, filed on Friday in California federal court, accuses the stars of colluding with EMAX co-founders Steve Gentile and Giovanni Perone as part of an organized pump-and-dump scheme, “causing investors to purchase these losing investments at inflated prices.”
Alleging violations of state consumer protection laws, common law over aiding and abetting and unjust enrichment, the suit essentially accuses the celebrities of promoting worthless tokens.
“The Company’s executives, collaborating with several celebrity promotors, (a) made false or misleading statements to investors about EthereumMax through social media advertisements and other promotional activities and (b) disguised their control over EthereumMax and a significant percent of the EMAX Tokens that were available for public trading during the Relevant Period,” the complaint reads.
Back in June, Kardashian promoted EthereumMax to her 250 million followers on Instagram. “Are you guys into crypto????” Kim wrote. “This is not financial advice but sharing what my friends just told me about the Ethereum Max token! A few minutes ago Ethereum Max burned 400 trillion tokens—literally 50% of their admin wallet giving back to the entire E-Max community.”
Shortly after Kim’s post, the price of the token shot up more than 1,370%. The price has since dropped nearly 98%.
“This meteoric rise did not last long, and EthereumMax began to deflate immediately after Defendant Kardashian’s post,” the complaint reads. “On July 15, the price of the EMAX Token hit its all-time low: $0.000000017 per unit, a 98% drop from which it has not been able to recover.”
A month prior to Kim’s post, Pierce promoted the tokens amid a dispute with his former employer ESPN. Meanwhile, Floyd wore trunks featuring an advertisement for EthereumMax during his exhibition boxing match against Logan Paul in June.
“The Promoter Defendants’ improper promotional activities generated the trading volume needed for all the Defendants to offload their EMAX Tokens onto unsuspecting investors,” the complaint states. “While Plaintiff and Class members were buying the inappropriately promoted EMAX Tokens, Defendants were able to, and did, sell their EMAX Tokens during the Relevant Period for substantial profits.”
Kardashian, Mayweather and Pierce have yet to comment on the allegations.