Kim Kardashian and Jake Paul are among a host of celebrities currently facing legal action over using their sizable platforms to advertise cryptocurrencies.
With Bitcoin and other cryptocurrencies crashing further this week amid a massive sell-off, the celebrity lawsuits — which were filed earlier this year — have re-entered the public conversation.
In January, Kardashian was named in a class-action lawsuit alongside former NBA star Paul Pierce and boxer Floyd Mayweather, who have been accused of using their fame to promote EthereumMax as part of a larger scheme to defraud investors, per the suit.
According to the lawsuit, those endorsements were allegedly part of a broader scheme by EthereumMax’s creators to inflate the price of the token before selling it off, popularly referred to as a pump and dump.
The lawsuit states that the digital coin’s creators, Steve Gentile and Giovanni Perone, sold their holdings of EthereumMax “for substantial profits.”
Back in June of last year, Kardashian promoted EthereumMax, posting an ad for the cryptocurrency on her Instagram Stories.
“Are you guys into crypto ???? This is not financial advice but sharing what my friends just told me about the Ethereum Max token!” the ad read.
“A few minutes ago Ethereum Max burned 400 trillion tokens — literally 50% of their admin wallet, giving back to the entire e-max community.”
Kardashian’s post also encouraged viewers to “Swipe up to join the e-Max community.”
Per the BBC, the lawsuit states that sportsman Pierce promoted EthereumMax in a “widely discussed” Twitter post in May 2021, while Mayweather’s June 2021 boxing match with Logan Paul was also used to promote the coin.
Mayweather is alleged to have also promoted EthereumMax at a cryptocurrency conference.
In another lawsuit, YouTuber Paul and a host of other celebrities — including singer Nick Carter, social media star Ben Phillips, and rappers Soulja Boy and Lil Yachty — were in February named in a class-action lawsuit for promoting Safemoon.
CryptoPotato reported at the time that plaintiffs Bill Merewhuader, Christopher Polite, and Tim Viane blamed the celebrities for artificially pumping up the token’s value through their endorsements to millions of followers on social media.
Tweets from Paul and Carter promoting Safemoon remain online as of press time.
It has become apparent that celebrities and public figures, most notably Tesla and SpaceX CEO Elon Musk — who has frequently tweeted about cryptocurrencies — have the ability to influence the value of the coins simply by making positive or negative comments about them online.
Financial experts have previously warned Newsweek about the risks associated with cryptocurrency trading, including extremely volatile prices that can shoot up or collapse on little more than hype alone.
Addressing the lawsuit at the time that it was filed, EthereumMax denied the allegations in a statement to CBS MoneyWatch.
“The deceptive narrative associated with the recent allegations is riddled with misinformation about the EthereumMax project,” a company spokesperson said.
“This project has prided itself on being one of the most transparent and communicative projects in the cryptocurrency space. We dispute the allegations and look forward to the truth coming out.”
Newsweek has contacted representatives of Safemoon, EthereumMax, Kardashian, Mayweather, Pierce, Paul, Phillips, Carter, Soulja Boy, and Lil Yachty for comment.