It appears that rug pulls in cryptocurrency markets are becoming increasingly more common, with even celebrities taking part in the action.
According to a class action lawsuit filed in the Central District of California, Kim Kardashian, Floyd Mayweather, and Paul Pierce are being accused of making misleading promotions over EthereumMax, an Ethereum cryptocurrency knockoff that investors purchased between May 14, 2021 and June 27, 2021. The complaint alleges that the defendants made false claims to their fans and followers in an effort to persuade them to buy into the cryptocurrency platform, which the accused then exited with significant gains once the tokens rose in value.
Once the celebrities took off with their earnings, the investors were left with an almost-worthless token and substantial financial losses, since no lockup period existed that would restrict the promoters from selling the tokens they received in exchange for their advertising activities. As per the suit, EthereumMax jumped by more than 1,370% after Kardashian promoted the token to her some-251 million Instagram followers. Shortly after, though, the token plummeted over 98%, without ever recovering.
Mayweather also took part in the pump-and-dump scheme when he promoted EthereumMax on his clothing during a boxing fight against Youtube star Logan Paul last June. The boxing champion later revealed he was compensated $30 million for wearing the crypto platform’s advertisements on his trunks during the match. In the meantime, Pierce made a twitter post boasting about the amount of money he made in the span of a month just by investing in EthereumMax.
“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,” read the suit. The complaint alleges that California’s Unfair Competition Law and Consumers Legal Remedies Act were violated, with the defendants being accused of aiding and abetting, and unjust enrichment/restitution.
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