You can understand that Kim Kardashian and former NBA star Paul Pierce were trapped, but you’d think Floyd Mayweather would have learned to avoid crypto endorsements by now.
Along with the reality TV celebrity and former hoops player, the weight class boxing champion is being sued in federal court in California for making false and misleading statements while promoting EthereumMax, a cryptocurrency that the investor claims is a pump scam, Law360 reports.
In November 2018, the boxing champ paid more than $600,000 in fines for failing to reveal that his tweets supported an initial coin offering, or ICO, for fledgling crypto project Centra Tech, which was a paid supporter rather than a fan.
Read more: SEC, DJ Khaled, Floyd Mayweather Pay ICO Fee
Unfortunately for Mayweather and music producer DJ Khaled, who was sued alongside the 15-time world champion, Centra Tech was a scam whose founder was jailed for eight years for scamming investors out of $25 million.
While neither Mayweather nor Khaled was a party to the scam, they both got a lot of negative publicity in the crypto world.
Now Floyd appears to be back at the center of yet another cryptocurrency controversy as a token at best crashed and burned. The lawsuit alleges that the price of EMAX rose for nearly a week in late May after a press release announced that EMAX was “now the exclusive cryptocurrency accepted for online ticket purchases of the much-anticipated Floyd Mayweather vs. Logan Paul Pay-Per-View event.” on June 6.
The lawsuit said that coincided with Paul’s tweets and an Instagram post to 228 million followers a week later by Kardashian. Kardashian’s post appearing in the lawsuit has #AD as the last of seven hashtags that include #EMAX and #DISRUPTHISTORY. “19 percent of respondents who said they had heard of the post invested in Ethereum Max as a result,” a study by data intelligence firm Morning Consult reported, Roll Call reported in October.
The newly launched cryptocurrency soared, with a transaction volume of $112.9 million on May 29, according to CoinMarketCap — up from $2.8 million on May 26 — and crashed, dropping below $2.4 million on June 26. On January 10, trade volume was less than $63,000. (It is worth noting that like many newly launched cryptocurrencies, the price of the EMAX token was accurate, rising to six zeros after the decimal point – $0.0000007 – before dropping to the current seven-zero figure, $0.000000019 There were initially 2 quadrillion of them with them.)
In the lawsuit, which is seeking class action status, the plaintiffs accuse the celebrities of “collaborating” with executives “in the misleading promotion and sale of a digital asset associated with EthereumMax.” The lawsuit adds that the company’s founders and executives sold their EMAX while the price was on the rise.
Mayweather and Khaled aren’t the only famous public figures to have cryptocurrency approved by the US Securities and Exchange Commission for failing to disclose their salaries. In February 2020, actor Steven Seagal paid a fine of $157,000 for social media posts supporting Bitcoiin2Gen, and in September, Rapper TI paid $75,000 in connection with the FLiK token ICO.
The Securities and Exchange Commission (SEC) first jumped on the issue in November 2017, when it issued a statement urging caution about celebrity-backed ICOs and urging “investors to seek potential investments rather than relying on paid endorsements from artists, sports personalities, or other icons.”
Lots of other celebrities have endorsed cryptocurrencies and companies like exchanges. William Shatner has done some work, but he’s also legally interested in the industry, getting involved in Twitter battles on internal industry issues such as whether Craig Wright is Bitcoin creator Satoshi Nakamoto (Shatner was on the “no” side), and advocates for Ethereum creator Vitalik Buterin.
Recently, legendary NFL quarterback Tom Brady and his model wife, Gisele Bundchen, are acquiring a stake in cryptocurrency exchange FTX — whose founder has testified before the Senate as an industry expert. Then there is Tesla founder Elon Musk, whose Dogecoin infusion has turned the prank-created memecoin into a big cryptocurrency.
And Mayweather? Well, if he endorses Centra Tech, he may face judgment again regardless of whether he has made it clear that he is a paid supporter, or whether or not it is a legitimate ICO.
Less than three years ago, the agency said that Floyd’s November 28, 2019 settlement with the US Securities and Exchange Commission required him to agree to “not promote any securities, digital or otherwise, for a period of three years.”