New Lawsuits Target Cryptocurrency Companies and Their Celebrity Endorsers | Bilzin Sumberg

Featured in Post job The regulators’ clear intentions are to bring greater order to the cryptocurrency industry this year. The past three weeks have shown that private litigants are not waiting for regulators to rein in alleged bad actors in the cryptocurrency market. Two new high-profile lawsuits target what prosecutors are calling fraudulent activity in this booming industry.

First, the claim that “the publicly traded cryptocurrency company’s platform is a house of cards, built on false promises and realistically impossible assertions that was specifically designed to cash in on the crypto-craze, at the direct expense of any ordinary investor,” lawyers filed a supposed class action suit overnight. Christmas vs Voyager Digital Ltd. and its subsidiary Voyager Digital LLC.

The lawsuit alleges that the Voyager companies made false claims, including false statements that their cryptocurrency platform was “100% commission-free” and that customers would get the best possible price for their crypto trades. As a result, according to the complaint, the defendants reaped billions of dollars in new revenue from people with little or no investment experience.

The complaint also asserts that Voyager failed to disclose that it set the price on its platform high enough to charge “exorbitant hidden commissions” on every cryptocurrency trade, and that the trading price was, in fact, more expensive than trades on other platforms.

Mark Cuban, owner of the NBA’s Dallas Mavericks, is a major contributor to Voyager. The complaint alleges that he made comments at a press conference specifically targeting inexperienced investors with “false and misleading promises to make big profits in the cryptocurrency market.”

The attorney for the plaintiffs suing the Voyager defendants intends to represent a nationwide class and a separate class in Florida. The supposed patriotic class will claim that Voyager violated the New Jersey Consumer Fraud Act, and is also responsible for illicit enrichment. The Florida class, which will allege violations of the Deceptive and Unfair Trade Practices Act in Florida, will consist of people who used the trading platform to place cryptocurrency investment orders. The lawsuit is pending in the Southern District of Florida.

Meanwhile, in a separate class action filed earlier this month in the Central District of California, Kim Kardashian and boxer Floyd Mayweather face allegations that they misled investors when promoting a little-known cryptocurrency called EthereumMax to their millions of social media followers. This class-action lawsuit accuses EthereumMax and its celebrity promoters of artificially inflating the price of the token by making “false or misleading statements” in social media posts.

An Instagram post by Kardashian last year promoting the EthereumMax cryptocurrency, allegedly spurring a significant amount of investment activity by unwary investors. “Are you guys into coding????” Kardashian Books. “This is not financial advice but sharing what my friends just told me about the Ethereum Max token!” Kardashian proceeded to praise this new coin.
Mayweather endorsed the token in a boxing match with YouTube star Logan Paul. In fact, EthereumMax was accepted as payment for event tickets, a move the lawsuit asserts led to a significant increase in trading volumes. Mayweather is also alleged to have promoted EthereumMax at a major Bitcoin conference in Miami, and is said to have done so without revealing that he was compensated for his statements about the coin.

The lawsuit alleges that the aforementioned plaintiff, who is based in New York, and other investors who purchased EthereumMax tokens between May 14, 2021 and June 17, 2021, incurred losses as a result of the celebrity’s behavior. EthereumMax has lost about 97% of its value since early June, leading to allegations of a “scam” and/or a “pump and dump” scheme.

The lawsuit states that EthereumMax has “no connection” with Ether, the second largest cryptocurrency. The lawsuit states that the company’s name may be an attempt to mislead investors into incorrectly believing that the token is part of the Ethereum network.

Regardless of the merits of these and other recent legal procedures, there can be little doubt that crypto companies – and their promoters – simply do not need to comply with the decrees and expected new regulatory scrutiny. They should also be wary of lawsuits alleging misrepresentation of value and exaggeration of potential returns on investment. In this regard, the “Wild West” cryptocurrency is getting wild.