chevron-down Created with Sketch Beta.


Practice Areas & Settings

I Saw Kim Kardashian Buy EthereumMax, So I Bought EthereumMax

Melissa Lynne Watt and Raika Casey

I Saw Kim Kardashian Buy EthereumMax, So I Bought EthereumMax
jpgfactory via iStock

Jump to:

Kim Kardashian’s influential Instagram platform of 288 million followers has long caught the eye of weight loss tea and vitamin companies vying for an #Ad on her Instagram grid. However, recently, Kardashian’s ability to influence her audience has caught the attention of financial regulators. Last year, Kardashian promoted a new, almost wholly unknown, cryptocurrency: EthereumMax (EMAX).

The #Ad

On June 14, 2021, Kardashian posted on her Instagram story asking if any of her 251 million followers (at the time) were “into crypto” and shared what her “friends” told her about the EMAX token. The hashtags “#DisruptHistory,” “#WTFEmax,” and “#Ad” were above a swipe-up link. Chairman of the UK’s Financial Conduct Authority described Kardashian’s #Ad as “the financial promotion with the single biggest audience reach in history.” The #Ad raised more than a few eyebrows about celebrity promotions of cryptocurrency.

Among other celebrity endorsements of EMAX, Kardashian’s post is now the subject of a class action lawsuit—potentially allowing a court to weigh in on whether Kardashian took a break from promoting weight loss tea to participate in a “pump-and-dump scheme” involving EMAX.

The Other Celebrity Endorsements

EMAX tokens, which are speculative digital tokens, first launched on May 14, 2021. By May 26, 2021, less than two weeks after EMAX launched, the complaint alleges that Paul Pierce, a former professional basketball player who had just been fired from his job as an ESPN analyst, and Floyd Mayweather, were already promoting EMAX as a lucrative, game-changing opportunity. Pierce tweeted that he made more money with EMAX in a month than with ESPN in a year and told his Twitter followers to check EMAX out for themselves. That same day, EMAX announced that it was now the “exclusive CryptoCurrency” accepted for online tickets for the Floyd Mayweather vs. Logan Paul fight. The complaint alleges that the trading volume for the EMAX token “exploded” because of these promotions and rose almost five times higher than the previous day. Mayweather continued to promote EMAX in early June.

Then, on June 14, Kardashian posted her #Ad. The complaint cites survey results indicating that nearly half of all cryptocurrency owners saw Kardashian’s ad, and, as a result, 19 percent invested in EMAX. Following the celebrity influencers’ endorsements, EMAX tokens reportedly rose by 1,370 percent in value. Less than a month later, EMAX allegedly saw a 98 percent drop in its price.

The Lawsuit

The class action lawsuit alleges that Kardashian, Mayweather, Pierce, and the company and executives behind EMAX took part in a pump-and-dump scheme to inflate the EMAX token price artificially. Specifically, the complaint alleges that the defendants made “false or misleading statements” about the EMAX token to promote it to “unsuspecting investors.” Then, when “unsuspecting investors” began buying the tokens in droves and generated high trading volume, the defendants allegedly sold their own EMAX tokens at the inflated price for substantial profits, leaving investors with a “practically worthless digital asset”—a classic pump-and-dump. The complaint also alleges that the defendants failed adequately to disclose that they were being compensated for their endorsements.

Payday or Fraud?

Shilling cryptocurrency is not uniquely Kardashian. From A-List celebrities like Matt Damon to lesser-known influencers, all levels of celebrity are shilling the unregulated Wild West of cryptocurrency as an untapped gold mine to their followers. In contrast, the celebrities get their paydays from promoting it. Gary Gensler, the head of the SEC, believes the crypto market is fertile ground for fraud and manipulation—especially since flashy celebrity endorsements have replaced rigorous, balanced, and complete information about cryptocurrency. The power of celebrity endorsements and the exponential reach of a celebrity’s social media have only made convincing people to gamble on speculative, unproven investments even more accessible.

This class action lawsuit may provide important insight into how courts will handle both advertising disclosures in the cryptocurrency space and celebrity promotions of cryptocurrency.