“Are you on crypto ????” Kim Kardashian posed in Instagram last summer, attracting the attention of her 250m followers to a new coin called EthereumMax.
The well-known TV documentary may have made the financial market more accessible and accessible, raising cryptocurrency exchanges and gaining popularity from other celebrities. But a week after the message, the tokens lost 70 percent of their value. The price did not return.
Now, these losses are in the midst of a lawsuit alleging that Kardashian and other celebrities, including boxer Floyd Mayweather and former NBA player Paul Pierce, helped raise the value of the brand as part of a conspiracy that enriched his supporters in spending ordinary money.
“The emerging cryptocurrency sector unfortunately suffers from so-called influencers who promote an extremely dangerous ‘fast-growing’ type of money for their audiences and fans,” said John Jasnoch, a friend of Scott and Scott, who brought the class-public prosecution.
The complaint, filed in federal court in the United States earlier this month, also alleges that EthereumMax sponsors used the cash flow from Kardashian’s followers to sell the quantity of the tokens at a profit, and put their profits in jeopardy.
Kardashian’s lawyers declined to comment on the allegations. EthereumMax, which has no affiliation with the Ethereum network itself, said: “We are against the allegations and we hope the truth will come out.”
Mayweather and Pierce did not respond to a request for comment.
The case comes at a time when the explosion of retail sales during the epidemic has increased the pressure to accept celebrities in the financial markets.
“More and more retailers. . . and [trading] based on non-traditional methods, whether they are on Reddit or on Instagram. These things are new, “said Charles Whitehead, a professor at Cornell Law School.
An October survey conducted by consumer research company Cardify found that for those with crypto currencies, celebrities and administrators are the ones who get the information. About 60 percent of those surveyed turned to celebrities to find out more about crypto currencies than half the time.
And celebrities have become an extremely legitimate source of unchanging symbols. In a document released by EthereumMax in October, the brand listed its most popular and commercial-based brands as the brand’s top brand power.
Many other well-known people have openly participated in the crypto competition as digital markets have grown. Players Matt Damon, Lindsay Lohan and Steven Seagal, and director Spike Lee are among those with a crypto partnership.
“This is considered an easy investment,” said the head of the crypto marketing agency, who asked not to be named, adding that the credentials are often pushed by talented service providers who include marketing and several of their top clients. price tags ranging from tens of thousands to millions of dollars. “You haven’t seen anything yet.”
Mayweather, who featured EthereumMax along with other brands in his shorts in a major battle in June against YouTube magastar Logan Paul, said in an interview at a time when logos alone brought in $ 30m.
Chris Chapman, a co-founder of law firm Mayer Brown, said, “in the meantime, the development of many cryptocurrencies is being taken lightly.” But the U.S. Securities and Exchange Commission and the Financial Conduct Authority in the UK have issued warnings about people promoting cryptocurrencies.
Popular messages about crypto goods are often followed by a sharp rise in sales, experts say. On May 26, Pierce wrote “@espn I don’t want to. @Ethereum_max I made a lot of money with this crypto last month [sic] I did it with you all in one year. ” The next day, dollar trading votes in the EthereumMax quintupled.
From May 24 to May 29, the price of EthereumMax increased by more than 1,400 percent until historically. By June 12, the price had dropped by 85 percent. Two days later, Kardashian shared her Instagram message. Commercial activity went up after that, and the price dropped.
UK authorities have already announced Kardashian’s messages on EthereumMax. In a statement in September, FCA chief executive Charles Randell said Kardashian’s Instagram post “could be a huge boost for a larger audience in history”.
But despite the growing popularity of cryptocurrencies, the improvement in their promotion lags behind in economic tools in many areas. Gary Gensler, chair of the SEC, this summer called the crypto “Wild West” when he urged Congress to give his organization more power to protect money.
At the same time, consumers’ understanding of crypto currencies has followed their popularity. Seventy percent of crypto merchants have been placed in censuses for less than a year, a Cardify survey found, and 85 percent said they did not fully understand what they had.
The influence extends beyond the crypto markets. More than half of American Generation Z and millennial investors are said to have made financial decisions because of the information they saw on TV, according to a US M1 Financial program survey.
As regulators rush to find out about the market, participants in the crypto market predict that the role of popular proponents will continue to grow, largely due to the popularity of anonymous tokens (NFTs) whose value often stems from important approvals.
The gaming world, which has been heavily influenced by international cooperation, has been strongly linked to the rise of cryptocurrencies. Basketball player Stephen Curry, American footballer Tom Brady and Rob Gronkowski, golfer Tiger Woods and Trevor Lawrence were selected in the NFL by some of the players with tokens or crypto exchanges. Lawrence signed a multi-year contract with a crypto Blockfolio management program prior to preparation, and was paid a portion of the signature bonus in cryptocurrency.
Curry and Brady both work as “ambassadors” crypto FTX exchange, a company that paid $ 135m in claims for rights to the Miami Heat basketball court, and received fairness in the company. Nascar star Landon Cassill became the first fully paid cryptocurrency driver in July.
“You have a lot of experience [crypto] players have a lot of money in the air, “said Pam Kramer, head of crypto brokerage Voyager, a crypto partner of Gronkowski and Cassill. , “someone with the following is a way to connect with the audience, or build and expand communication with those who are there,” he said.
Whitehead at Cornell Law School said celebrities with the following common side effects would not always be properly counseled when it came to the most lucrative legal aid. “It is a question of whether the people providing the advice are well aware of the security legislation,” he said.
“It’s one thing to accept lip service and another thing to promote crypto asset,” Whitehead said. Given the reputation of EthereumMax promoters and the case, he said, “I hope people understand now”.