John Monarch had his ICO company Shipchain sued and shut down by the SEC. Also, Kim Kardashian, Floyd Mayweather Jr., and former NBA All-Star Paul Pierce are being sued over an alleged “pump and dump” crypto scam.
The class action complaint from the Central District of California stated that the three celebrities and the EtheremMax shared misleading statements about EthereumMax cryptocurrency.
“The Company’s executives, collaborating with several celebrity promotors, (a) made false or misleading statements to investors about EthereumMax through social media advertisements and other promotional activities and (b) disguised their control over EthereumMax and a significant percent of the EMAX Tokens that were available for public trading during the Relevant Period,” the complaint reads.
EthereumMax, a firm that offers ERC-20 tokens on the Ethereum network has partnered with the three stars to promote its digital token. As of Wednesday morning, the digital token is trading around $0.000000017 according to data from CoinMarketCap.
Mayweather promoted EthereumMax on his trunks during his exhibition boxing match against the YouTuber Logan Paul in 2021. The boxing champion said that he received around $30 million for all the ads on his trunks.
On the other hand, Kim shared EthereumMax in June 2021 to her 250 million Instagram followers while Pierce posted about his earnings from the EthereumMax “in the past month” on his Twitter account in May 2021.
“The Promoter Defendants’ improper promotional activities generated
the trading volume needed for all the Defendants to offload their EMAX Tokens onto unsuspecting investors. While Plaintiff and Class members were buying the inappropriately promoted EMAX Tokens, Defendants were able to and did, sell their EMAX Tokens during the Relevant Period for substantial profits,” the complaint reads.
A spokesperson for EthereumMax told MarketWatch the allegations were part of a “deceptive narrative” about the company.
“In my years of representing athletes and celebrities, I constantly advise them that, beyond the legal language in any contract, they should always be sure that they genuinely have an affinity for the product or service that they are endorsing,” Darren Heitner, Professor of Sports Law at the University of Florida, told MarketWatch in an email referencing the complaint. “It is rarely beneficial for someone to enter into an inauthentic relationship with a brand, particularly if that person has accumulated significant wealth throughout his/her career. That is what makes a situation like that concerning EthereumMax so mind-boggling.”
“Assuming the assertions in the Complaint are true, Floyd Mayweather, Kim Kardashian, and Paul Pierce engaged in this opportunity precisely for a pay-day and nothing further. The problem with that is that their fans and supporters oft believe their promotional efforts to be genuine and rely upon their statements, perhaps to their detriment,” Heitner continued.
Is Kevin Harrington and Shipchain’s John Monarch next?
Kevin Harrington, the shark behind the TV show “Shark Tank” has been one of the advisors of Shipchain. The platform is a blockchain-based shipping tracking company that was shut down by the Securities and Exchange Commission (SEC).
John Monarch and Aaron Kelly, the co-founders of Shipchain, allegedly violated federal securities laws for conducting an illegal initial coin offering (ICO), according to the Securities and Exchange Commission. The executives allegedly defrauded investors of $27.6 million by unlawfully selling over 145 million unregistered SHIP tokens during the ICO in late 2017 to early 2018.
Kevin Harrington promoted the SHIP crypto’s ICO through different marketing channels such as online videos, websites, and presentations. However, contrary to other celebrities, Kevin Harrington isn’t sued yet over his promotional role in the scammy SHIP cryptocurrency.
“It appears to be particularly easy to convince people to spend money on cryptocurrency projects, which makes it more important for athletes and celebrities to conduct thorough due diligence on these platforms before associating themselves with the companies and do whatever they can from being viewed as merely being money-hungry and connected to a pump-and-dump scam,” Heitner concluded.