Celebrities Misled Crypto Investors
Ryan Huegerich, a New York resident, filed a complaint with the U.S. District Court of the Central District of California, on behalf of other investors who bought the EthereumMax (EMAX) token. Huegerich, also known as the plaintiff, alleged that the celebrities collaborated with the executives behind EMAX to promote a fraudulent scheme.
Huegerich, who was among the investors that bought the token between May 14 and June 27, 2021, stated that:
“Defendants touted the prospects of theCompany and the ability for investors to make significant returns due to thefavorable “tokenomics” of the EMAX Tokens. In truth, Defendants marketed theEMAX Tokens to investors so that they could sell their portion of the Float for aprofit.”
The EMAX token was launched back in May 2021, by developers who remain unknown. Meanwhile, the complaint alleged that the use of the name “EthereumMax” was a way of misleading investors into thinking that the token was affiliated with Ethereum, the second-largest crypto asset.
Former NBA star, Paul Pierce, who lost his job as an analyst at the television broadcasting network ESPN, first advertised the token in May 2021 via Twitter. In June, Floyd Mayweather and Kim Kardashian also promoted EMAX, with Mayweather advertising the token at the Bitcoin 2021 Conference in Miami.
In the same month, the boxing legend wore shorts with the EMAX logo, during a fight between Mayweather and Logan Paul. and Kardashian promoting the coin Instagram story.
The endorsements by these celebrities caused the price of the EMAX token to pump at various times. According to Coingecko, the token reached an all-time high (ATH) of $0.000000597636 on May 31, 2021.
While there was some price retracement, EMAX pumped again after Kardashian’s post, but plummeted shortly after. At the time of writing, the token has lost almost all its gains, dropping 97% to currently trade at $0.000000017227.
Continuous Rise in Pump and Dump Schemes
Meanwhile, Huegerich alleged that the promotional activities of the celebrities created the necessary trading volume that enabled the Defendants “to offload their EMAX Tokens onto unsuspecting investors.” The aggrieved investor further referred to the whole affair as a “pump and dump” scheme.
While the price of the token has not seen any significant recovery, investors are left with bags of nearly worthless digital coins. However, none of the celebrities have made a statement concerning the lawsuit.
With the continuous growth of cryptocurrency comes also an increase in more fraudulent tokens. There have been many instances of celebrities shilling coins that turn out to have no value, leaving investors with way less money than before.
As a means to protect investors, regulatory bodies globally, such as the UK’s Financial Conduct Authority, have issued several warnings against cryptocurrency schemes that promise hyperbolic returns. The onus is on the investors to do their research, or risk losing all their funds.