EthereumMax Celebrity Promotion and Token Sale Class Action

This class action concerns sales of EthereumMax (EMAX) tokens, alleging that executives made false or misleading statements to investors about EthereumMax and disguised their control over it and a significant portion of the EMAX tokens to mislead investors. The complaint brings suit against an unknown entity it calls “Corporate Defendant X,” three individual executive defendants (Steve Gentile, Giovanni Perone, and Justin French), and three promoter defendants (Kim Kardashian, Floyd Mayweather, Jr., and Paul Pierce).

The class for this action is all investors who bought EthereumMax tokens between May 14, 2021 and June 27, 2021 and were damaged thereby.

EMAX tokens are digital assets known as ERC-20 tokens that were launched on May 14, 2021. While it uses the Ethereum blockchain, it does not have a connection with Ethereum, the second-largest cryptocurrency. The complaint alleges, “This name association appears to be an effort by the Company and the Executive Defendants to mislead investors into believe that the EMAX Tokens were a part of the Ethereum network (when they are not).”

At the launch, no whitepaper existed for EMAX. Whitepapers are offered by founders of a cryptocurrency founders “that give[] investors technical information about its concept, and a roadmap for how it plans to grow and succeed.”

The company later stated, “We launched EMAX with a vision to bridge the gap between the emergence of community-driven tokens and the well[-]known foundational coins of crypto, creating a unique token that provides lifestyle perks with financial rewards and incentives to its holders with a pathway for practical long-term use in everyday life.”

However, the complaint alleges, “In plain terms, EthereumMax’s entire business model relies on using constant marketing and promotional activities, often from ‘trusted’ celebrities, to dupe potential investors into trusting the financial opportunities available with EMAX Tokens.”

The complaint reviews the promotional activities the promoter defendants undertook on behalf of EthereumMax. This included anti-ESPN posts by Pierce, an association with a Mayweather-Paul fight, and a posting by Kim Kardashian to her 250 million followers.

After the launch and promotional activities, the price of EthereumMax surged upwards. Its maximum price represented a 1,370% rise from its initial price, the complaint alleges, but by July 15, it hit an all-time low that represented a 98% drop.

The complaint alleges, “The Promoter Defendants’ improper promotional activities generated the trading volume needed for all the Defendants to offload their EMAX Tokens onto unsuspecting investors.”

The complaint claims that after “the precipitous drop of the EMAX Token price[,]” the chairman of the United Kingdom’s Financial Conduct Authority (FCA) issued a statement saying that Kardashian’s promotion of the EMAX token might be “fraudulent.”

Regulators, the complaint alleges in its section title, are “Rais[ing] Concerns that EthereumMax Is a ‘Pump and Dump’ Scam.”

The complaint alleges that the defendants have violated certain California laws, including its Unfair Competition Law and Legal Remedies Act.

Article Type: Lawsuit
Topic: Consumer
Tags: Cryptocurrency, Deceptive Advertising