Kim Kardashian, Floyd Mayweather, and a crypto token. Are any of your colleagues considering getting involved with cryptocurrencies???” During an Instagram post last summer, Kim Kardashian called the attention of her 250 million followers. To a new cryptocurrency known as EthereumMax. Prompting the subject to be asked again.
This message may go down in financial market history because of its reach. Which far outstrips bitcoin advertising as well as the support of hundreds of other big-name celebrities. In contrast, after a week of receiving the letter. The tokens had lost more than 70 percent of their original value. It is unlikely that the price will rebound from its low position. As a result, they are the subject of a lawsuit in which Kardashian and other celebrities. Including boxer Floyd Mayweather and former NBA player Paul Pierce. Are accused of participating in an illegal conspiracy to inflate the token’s value. At the expense of ordinary shareholders.
The class-action lawsuit was filed by John Jasnoch, a partner at Scott and Scott. Who stated that, “the young cryptocurrency sector is tragically plagued by so-called influencers. Whom advocate extremely unsafe ‘get rich quick’ type investments to their audience and followers.”
Additionally, the complaint, which was filed earlier this month in a federal US court, alleges. That the backers of EthereumMax took advantage of the influx of cash. From Kardashian’s followers to sell a significant amount of tokens at a profit. Pocketing their profits before the price of the tokens plummeted even further.
Kim Kardashian lawyers declined to comment
The allegations not addressed by Kardashian’s attorneys. Who declined to comment on the matter further. According to a statement released by EthereumMax. Which has no affiliation with the Ethereum network itself. “We strongly dispute the claims and look forward to the truth disclosed.”
Mayweather and Pierce did not respond to requests for comment when reached by phone.
In recent years, as a result of an increase in retail trading during the flu epidemic. Celebrity endorsements have become increasingly prominent in the financial markets.
According to the Wall Street Journal, consumers are increasingly depending on non-traditional sources of information. Such as Reddit and Instagram, to inform their trading decisions. In the words of Charles Whitehead, a professor at Cornell Law School, “these are absolutely novel concepts.”
The results of a recent survey by the consumer research firm Cardify revealed. That well-known celebrities and corporate executives are the most trusted sources of information. For bitcoin investors and holders. According to the results of the research, nearly 60% of respondents sought information on cryptocurrencies. From these high-profile persons more than half of the time.
Furthermore, celebrities have emerged as an increasingly important source of legitimacy. For volatile tokens in recent years, with their endorsements becoming increasingly important. In an October document given by EthereumMax, the firm highlighted celebrity and influencer marketing. As one of the token’s strongest assets. Citing it as one of its most valuable assets.
Many additional well-known figures have publicly embraced crypto
As the digital asset markets boomed, several additional famous people publicly. Joined the crypto fray. Among others having crypto partnerships are Matt Damon. Lindsay Lohan, Steven Seagal, and Spike Lee.
The endorsements sometimes pushed by talent brokers who will pitch packages. That involve posts by numerous of their high-profile clients. With price tags ranging from tens of thousands to millions of dollars. The best is yet to come.
In an interview at the time, Mayweather claimed that the logos on his shorts alone brought in $30m.
According to Chris Chapman of Mayer Brown, “most crypto asset promotion now poorly regulated”. However, the US Securities and Exchange Commission. And the UK Financial Conduct Authority have both warned about crypto influencers.
Analysts say celebrity endorsements of crypto assets often lead to spikes in trading activity. “@espn I don’t need you. More money with this crypto in a month than with you in a year.” The next day, dollar trade volumes in EthereumMax quadrupled.
From May 24 to 29, the price of EthereumMax increased by about 1,400%. By June 12, the price had dropped 85%. Kardashian followed up also with an Instagram post. The price fell as a result of increased trading activity.