Kim K, Floyd Mayweather and Others Sued Over Crypto Promotion
Influencers have a lot of power. They can shape how people feel about themselves or think about a product. They
Influencers have a lot of power. They can shape how people feel about themselves or think about a product. They can hype up a movie or song or encourage a cancel culture event if someone offends them. It’s a level of power and responsibility that we as a society will have to reckon with someday. But for now, influencers and celebrities hold a lot of sway, and they don’t always use it for good. Kim Kardashian, Floyd Mayweather and others are currently being sued for abusing their position of power to make money. Here’s what we know.
You Can’t Pump and Dump, Folks
It’s called a “pump and dump” scam. Someone hypes up the value of investing in a certain commodity, using their position of influence to encourage people to buy in. As the value of that product increases, the person who encouraged the trend then sells what they owned – which is now worth a significantly larger amount. It’s a tale as old as time but playing out in a new arena: social media.
Stars like Kardashian, Mayweather and others are currently facing down the barrel of a lawsuit for engaging in this type of crypto promotion. Reuters reports, “The lawsuit, filed Jan. 7 in Los Angeles federal court, claims the celebrities touted tokens sold by EthereumMax, or EMAX, in order to boost its price and make themselves a profit ‘at the expense of their followers and investors.’”
According to the lawsuit, Kardashian promoted EthereumMax in mid-2021, to her hundreds of millions of social media followers. Included in the post was an #AD hashtag as it was a sponsored post. Mayweather promoted the cryptocurrency multiple times on his boxing trunks, including in his highly publicized fight against controversial YouTuber Logan Paul.
EthereumMax is also being sued, the suit brought by a New York resident who bought tokens from the company and then lost money.
The Crypto Boom
What Kardashian, Mayweather and others could argue is that they were simply hitting crypto at the right time – just as the digital currency was booming. Other celebrities such as Elon Musk were also stoking interest in buying into crypto – although Musk’s target was Dogecoin, the crypto that started out as a joke.
If all they did was share sponsored information as the cryptocurrency boom hit its peak, they can’t be held liable, right? Fox News shares, “Charles Randell, head of the U.K.’s Financial Conduct Authority, said in a speech in September that Ms. Kardashian’s post might ‘have been the financial promotion with the single biggest audience reach in history.’ He also criticized the disclosed ad, saying Ms. Kardashian wasn’t required to tell followers that EthereumMax was a month-old, speculative digital token.
‘I can’t say whether this particular token is a scam,’ Mr. Randell told the Cambridge International Symposium on Economic Crime, according to a copy of his remarks posted online. ‘But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote coins that turn out simply not to exist at all.’” EthereumMax claims they were simply looking for exposure and denies that it was a scam.
Time will tell if the lawsuit bears fruit. It may change the face of influencer sponsored ads in the future, so it is being watched closely.
The Responsibility of Social Media Influencers – Are You ‘The Rock’ or a Kardashian?
This lawsuit has also sparked an online debate about the responsibility of influencers. Some influencers use their platform for good, such as Dwayne The Rock Johnson. One of the most popular social media influencers of all time, the former wrestler-turned actor is beloved by pretty much everyone. His content is inspiring, positive, and heartfelt. It’s a good example of using your power to encourage people and uplift them.
While the Kardashians aren’t overly negative, many of them run accounts that control the tides of fashion, beauty and luxury items. On the simple word of a post by a Kardashian, a beauty product might sell out – or it may be canceled forever. A fashion line may become the new must-have item, or it might go the way of bellbottoms and mom jeans – oh wait, those are back again.
The question of course is: should they have so much power? Should people have the ability to control the future of a product or person just because they have the ear of millions of fans? Right or wrong, this is the reality we currently live in. The lawsuit will answer some questions about how much we can hold influencers responsible for the content they plug – and whether or not they’re being held accountable for how they use their power.