Kim Kardashian faces a "fraud" lawsuit in the cryptocurrency market

Investors have sued reality TV star Kim Kardashian, accusing her and two other personalities of fraud and misrepresentation.

The lawsuit relates to speculation in the cryptocurrency market, and was filed in a California court against: Kardashian, boxer Floyd Mayweather Jr., basketball player Paul Pierce, as well as a company offering a digital currency called Ethereum Max.

The lawsuit said the defendants "misleadingly promoted and sold" to their followers Ethereum Max.

The company's chief executives have denied the accusations, saying they are looking forward to the truth.

Despite the similarity of the two names, there is no legal or financial link between Ethereum Max (the new digital currency) and Ethereum (the famous in the cryptocurrency community).

The lawsuit alleges that Ethereum Max committed a "fraud" of misleadingly inflating the stock's market price before selling it to investors for profit.

“The company, in conjunction with a number of celebrities, has promoted false or misleading statements to investors about Ethereum Max through social media advertisements and other promotional activities,” says the lawsuit, which was filed with the California District Court.

The defendants lured investors with the potential to make big profits, and as a result investors bought cryptocurrency - this buying rush in turn raises the price of the currency, at which point the owners sell it at a higher price and profit as a result.

Ethereum Max has relied on popular celebrities to promote the new digital currency among potential investors.

The lawsuit alleges that Paul Pierce, the former NBA star, promoted Ethereum Max via a lengthy post on his Twitter page in May 2021.

Pierce claimed that Ethereum Max helped him make a profit.

At the same time, Ethereum Max has started using former world boxing champion Floyd Mayweather Jr. to promote the coin on YouTube in collaboration with famous American blogger Logan Paul.

It is reported that Mayweather was also promoting Ethereum Max at a cryptocurrency conference.

Finally, reality TV star Kim Kardashian participated in the promotion of the Ethereum Max coin, through a post on her Instagram page, where Kardashian has a following of about 250 million fans.

"This is not financial advice, but rather a sharing of what friends have been telling me about the Ethereum Max cryptocurrency," Kardashian wrote.

For its part, the Financial Conduct Authority in the United Kingdom, through its president, Charles Randall, said that Kardashian “asked her 250 million followers to speculate with a digital currency.”

The British authority considered that this post by Kardashian - which was marked with an advertisement - may be "the financial promotion that reaches the largest number of followers of a single character in history".

For its part, Ethereum Max said its marketing and PR efforts "always come from an induction, not an inducement to buy - thus, Kardashian's Instagram post was simply meant to introduce the project and its benefits."

"Our goal is for our marketing and PR efforts to get people to research our project ... before making a decision," Ethereum Max told the BBC.

"This approach required a lot of time, effort, and resources - the exact opposite of what happens in fraud cases," the company continued.

However, this promotion contributed to an increase in the value of Ethereum Max by more than 1,300% over its initial value, before it plunged to its lowest level ever one month after Kardashian's post.

During the rise in the value of Ethereum Max, the company reaped huge profits from the buying spree from investors, who then lost a lot.

The lawsuit named and inflicted damages on Ethereum Max speculators between May 14 and June 27 – “claimants.”

For its part, Ethereum Max denied the claim.

Steve Gentile, named in the lawsuit as a co-founder of Ethereum Max, said: “The misleading narrative accompanying the recent lawsuits is riddled with misinformation about the Ethereum Max project.

Gentile told the BBC: "We deny what was stated in the lawsuit, and we look forward to the emergence of the truth."

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