Celebrities Are Getting Sued Over Their Affiliation With Crypto Projects. Here’s Why

“Celebrities are an easy target for [lawsuits] as typically they have deeper pockets than the company or company insiders,” former CFTC enforcement attorney Braden Perry told Blockworks

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Kim Kardashian | Source: Shutterstock

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key takeaways

  • The lawsuits range from allegations of copyright infringement to misleading investors
  • Kim Kardashian, Floyd Mayweather Jr. and Quentin Tarantino have been threatened with legal action over their affiliation with crypto projects

Kim Kardashian, Floyd Mayweather Jr. and Quentin Tarantino may be best known for their roles in reality television, sports and award-winning films, but recently the three have joined a growing list of celebrities being sued for their affiliation with cryptocurrency-related projects. 

On June 14, Kardashian touted token EthereumMax for all of her 250 million followers to see.  

“Are you guys into crypto???? This is not financial advice but sharing what my friends just told me about the EthereumMax token,” Kardashian wrote. “A few minutes ago EthereumMax burned 400 trillion tokens — literally 50% of its management portfolio going back to the entire E-Max community. Swipe up to join the e-max community.”

Boxer Mayweather also promoted the project in the runup to a televised fight with Youtuber Logan Paul, the same month for which some tickets were available for purchase with EthereumMax tokens.

After Mayweather announced that tickets could be purchased via EthereumMax tokens on May 26 the price surged, peaking on May 29 at 420 times its pre-May 26 level, according to data from Coinmarketcap. The price fell sharply within days—a decline that continued after Kardashian’s tweet. 

By July 1, two weeks after Kardashian’s post, the token’s price had fallen approximately 96% from its peak.

Seven months after the post, a class action complaint was filed against Kardashian, Mayweather, two EthereumMax executives and another public promoter of the token, former NBA player Paul Pierce. The suit alleges that EthereumMax executives inflated the price of the tokens before selling theirs for a large profit. 

New York resident Ryan Huegeruch, who lost money from investing in EthereumMax tokens, filed the claim on Jan. 7 in California federal court. Court filings alleged that the defendants advertised the project to raise the price of the token at “the expense of their followers and investors.”

“The [suit] alleges a classic pump-and-dump scheme, which claims an artificially inflated price of a stock by publicly touting false and misleading statements to the market and then insiders [later sell] the stock in order to make a profit,” Braden Perry, a former CFTC enforcement attorney, told Blockworks. 

“The celebrities are paid for promotion, but typically do not know much about the underlying technology,” Perry said. “Nevertheless, such activity is considered market manipulation for all involved, including the celebrity promoters.”

The complaint alleged that the post from Kardashian had “tremendous reach.” According to a survey by financial services firm Morning Consult, 21% of all adults in the US had seen, read or heard about the post. Roughly a fifth of those who said they’d heard about the post invested in EthereumMax, the consultancy reported. 

Head of the UK’s Financial Conduct Authority Charles Randell said that Kardashian’s Instagram post may have been “the financial promotion with the single biggest audience reach in history.” 

“The kinds of people that have been convinced by Kim Kardashian [to invest] probably shouldn’t be buying [crypto] anyway,” Stephen Young, founder of NFT marketplace NFTFi, told Blockworks. 

“I think [these lawsuits] are probably scaring some people away [from investing] but honestly, if that’s what made them decide to buy crypto they were going to lose their money anyway because they didn’t actually understand what they were doing.”

Director Quentin Tarantino is also facing an ongoing legal battle over his sale of NFTs based on his cult movie Pulp Fiction. 

On Nov. 16, Miramax, the Hollywood studio that produced the 1994 movie, filed a lawsuit accusing Tarantino of committing trademark infringement, breaching his contract, copyright infringement and of unfair competition. 

Miramax attorney Bart Williams accused Tarantino and his team of a “deliberate, premeditated, short-term money grab,” describing their actions as “profoundly disappointing,” according to a court filing

However, the 58-year-old filmmaker has pushed forward with his non-fungible tokens plan despite threats of legal action. The first of seven digital collectibles from the collection, which promise personalized audio commentary from the director himself, sold for $1.1 million at auction. 

“Celebrities are an easy target for [lawsuits] as typically they have deeper pockets than the company or company insiders,” Perry, the former CFTC enforcement attorney, said. “And with celebrities, it’s a very public battle, and underlying facts will dictate who’s right and who’s wrong. And whoever’s wrong may be looking at significant penalties from civil litigation and regulatory scrutiny.”


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