Kim Kardashian, Floyd Mayweather and the wild trip of a crypto token

"Do you like crypto ????" Asked Kim Kardashian in an Instagram post last summer and thus drew the attention of her 250 million followers known to a new coin as Ethereum Max.

The contribution of the reality TV star may have written finance history with its reach and exceeded the advertising for cryptocurrencies and the support of dozens of other well-known celebrities. But a week after the news, the tokens had lost 70 percent of their value. The price never recovered.

Now these losses are the focus of a lawsuit in which Kardashian and other celebrities, including the boxer Floyd Mayweather and the former NBA player Paul Pierce, have contributed to increasing the price of the token as part of a program that enriched its supporters at the expense of ordinary investors.

"The aspiring cryptocurrency sector is unfortunately plagued by so -called influencers, who recommend their audience and their fans incredibly risky investments of the type" quickly "," said John Jasnoch, partner at Scott and Scott, who brought the class action.

The lawsuit, which was submitted to a US Federal Court at the beginning of this month, also claims that the supporters of Ethereummax would have used the cash inflow of Kardashian's supporters to sell a considerable amount of tokens with profit and to collect their winnings before the price broke.

The Kardashian lawyers refused to comment on the claims. EthereMax, which itself has no connection to the Ethereum network, said: "We deny the allegations and look forward to the fact that the truth comes out."

Mayweather and Pierce did not answer on inquiries about comments.

The lawsuit comes at a time when the explosion of retail during the pandemic has increased the influence of celebrities on the financial markets.

"More and more small investors..

An October survey by the consumer research company Cardify showed that mainstream promotions and managers are the number one source of information for the owner of cryptocurrencies. Almost 60 percent of the survey participants turned to these top -class people to obtain information on cryptocurrencies.

and celebrities have become an increasingly important source of validity for the fleeting tokens. In a document published by EthereMax in October, the brand performed its celebrity and influencer marketing as one of the greatest strengths of the tokens.

Many other known people have publicly joined the crypto fight because the markets for digital assets are booming. The actors Matt Damon, Lindsay Lohan and Steven Seagal as well as the director Spike Lee are among those with crypto partnerships.

"It is considered easy money", said a senior employee of a crypto marketing agency who asked not to be named, and added that the notes are often promoted by talent agents who offer offers that offer the posts from several of their top-class customers price tags from tens of thousands to millions of dollar. "You haven't seen anything yet."

Mayweather, who showed EthereMax, among other brands on his shorts in a big fight in June against YouTube megastar Logan Paul, said in an interview that the logos alone brought in a total of $ 30 million.

Chris Chapman, partner of the law firm Mayer Brown, noticed that "promoting most crypto-assets is currently only slightly monitored". But both the US Securities and Exchange Commission and the British Financial Conduct Authority have published warnings of influencers that promote cryptomaes.

The news of prominent about crypto-assets often follows a strong increase in commercial activity, say analysts. On May 26, Pierce “@ESPN, I don't need you. @Ethereum_max I made more money with this crypto in the last month.

from May 24th to May 29th Ethereummax increased by more than 1,400 percent to a record high. The price had fallen by 85 percent by June 12th. Two days later, Kardashian shared her Instagram message. Commercial activity jumped up and the price finally fell.

The British supervisory authorities previously marked Kardashian's news in connection with EthereMax. In a September speech, FCA boss Charles Randell said Kardashian's Instagram contribution "Could the financial advertising with the greatest individual reach in history".

Despite the rapidly increasing popularity of crypto products, the regulation of their funding in many legal systems lags behind the traditional financial instruments. Gary Gensler, the chairman of the SEC, called Krypto the "Wild West" this summer when he asked the congress to give his agency additional powers to protect investors.

At the same time, the understanding of consumers for cryptoinvestment has remained behind their increasing importance. 70 percent of crypto dealers have been invested in TOKEN for less than a year, as the Cardify survey showed, and 85 percent stated that they could not fully understand their stocks.

The influence goes beyond the cryptoma markets. According to a survey by the US financial app M1 Financial, more than half of the American investors of Generation Z and Millennials stated that they had made investment decisions based on information they had seen on social media

While the regulatory authorities hurry to keep up with the market hype, cryptoma market participants predict that the role of prominent endors will only increase, especially in view of the increasing popularity of non -fungal tokens (NFTS), the value of which is often based on desirable endorses.

The sports world, which is already strongly involved in brand partnerships, was particularly associated with the promotion of cryptocurrencies. The basketball player Stephen Curry, the American football stars Tom Brady and Rob Gronkowski, the golfers Tiger Woods and the NFL-Top-Draft-Pick Trevor Lawrence are among the athletes with connections to certain tokens or crypto exchange. Lawrence signed a multi-year contract with the crypto management app Blockfolio before the draft and received part of his signing bonus in cryptocurrency.

Curry and Brady both act as “ambassadors” for the FTX crypto exchange, the company that paid $ 135 million for the name rights at the Miami Heat basketball team and received equity on the company. Nascar star Landon Cassill was the first driver to be fully paid in cryptocurrency in July.

"You have a situation in which many [Crypto] players have a lot of money in the room," said Pam Kramer, Chief Marketing Officer of the Krypto-Brokers Voyager, the crypto partner of Gronkowski and Cassill. She noted that the main priority of the company was the clarification of the customers and said that the support from celebrities was not their main marketing focus. But for the sector, "someone who already has a supporter is a way to connect with the audience or to establish and deepen a connection to an existing audience," she said.

Whitehead from the Cornell Law School said that celebrities with this widespread follow-up may not always be well advised when it comes to highly lucrative sponsorship deals with possible legal consequences. "It's about whether the advisory people are familiar with securities law," he said.

"It is one thing to support a lipstick and another to advertise a crypto asset," said Whitehead. In view of the profile of the supporters of EthereMax and this lawsuit, he said: "Hopefully people will understand now".