Floyd Mayweather Jr., the boxing champion, and reality television star Kim Kardashian are being sued for, allegedly, misleading investors in their promotion of a cryptocurrency token.
The class action lawsuit was brought on behalf of all investors who acquired EthereumMax tokens between May 14 and June 27, 2021.
According to the class-action complaint filed last Friday in the United States District Court for the Central District of California, the celebrities and other defendants are accused of making false or misleading statements to investors about the token via social media advertisements and other promotional activities.
Kardashian promoted EthereumMax in an Instagram post in June last year, when she had 250 million followers.
"Are you guys crypto enthusiasts?" Kardashian stated in the post, which was immediately followed by the disclaimer "this is not financial advise," that she wanted to share "what my pals just told me" about the EthereumMax tokens.
According to data intelligence firm Morning Consult, the campaign reached around 1 in 5 American consumers and 3 in 10 cryptocurrency owners.
Kardashian was previously chastised by the Financial Conduct Authority (FCA) of the United Kingdom for an Instagram advertisement in which she invited her fans to join her in purchasing cryptocurrency.
Mayweather marketed EthereumMax on his boxing trunks during a widely seen boxing match in June against YouTube sensation Logan Paul, among other times.
Anyone who purchased tickets using cryptocurrency was entered to win an authentic Mayweather boxing glove in addition to earning a discount.
During the bout, the former world champion wore the website address of the cryptocurrency on the waistband of his shorts in red letters.
On May 26, former NBA star Paul Pierce marketed EthereumMax in a similar manner on Twitter, the lawsuit said. The digital token was announced the same day as the "exclusive cryptocurrency" for internet ticket purchases for the Mayweather-Paul fight.
EthereumMax, which is unrelated to ethereum - the world's second largest cryptocurrency behind bitcoin - drew tens of millions of dollars in transactions last June as a result of the promotional frenzy.
Each coin peaked at US$0.00000597636, 196 times its previous value, but has subsequently lost over 97% of its value, according to CoinGecko.
The hype resulted in investors purchasing "losing investments" at pumped-up prices, which enabled the defendants to profit.
Several of the creators of EthereumMax are also named as defendants in the complaint, while another 10 unknown inventors are also being sued in order to ascertain their identities through the court discovery phase.