A new class-action lawsuit demands a jury trial against A-list celebrities and social influencers for their alleged participation in a classic pump and dump scheme relating to SafeMoon tokens.
SafeMoon, a Binance Smart Chain-native cryptocurrency, allegedly recruited a number of celebrities to lure investors in with misleading promotions. Some of the prominent names roped in by the class action include musicians such as Nick Carter, Soulja Boy, Lil Yachty and YouTubers Jake Paul and Ben Phillips.
According to the lawsuit, SafeMoon and its subsidiaries mimicked real-life Ponzi schemes by misleading investors to purchase SafeMoon tokens under the pretext of unrealistic profits.
Citing the ecosystem’s ‘burn’ and ’tokenomics’ as a key driver for SafeMoon’s price potential, the recruited celebrities allegedly convinced their followers to invest in the token.
Furthermore, the lawsuit points out numerous instances where the recruited celebrities successfully hyped the token enough to artificially increase the trading volume and price. While SafeMoon witnessed multifold growth over several months, the sudden departure of the company’s C-suite executives was when the token prices started plummeting, as evidenced by the graph below (marked in yellow):
The lawsuit alleges a ‘slow rug pull’ attempt from the involved celebrities, implying a slow sell-off of holdings as the trading volume from retail investors remains inflated:
“The Promoter Defendants’ improper promotional activities generated the trading volume needed for all the Defendants to offload their SAFEMOON Tokens onto unsuspecting investors.”
The lawsuit looks to represent and compensate all individuals who bought SafeMoon tokens since March 8, 2021 and were victims of the alleged rug pull attempt.
Related: Stop listening to celebrities for financial advice, says Binance Super Bowl campaign
One of the biggest highlights of Super Bowl 2022 was the crypto commercials. Amid the craze around the advertisements, crypto exchange Binance launched a marketing campaign to warn investors against the incoming crypto hype fueled by mainstream celebrities.
Superstars ≠ crypto experts.
Music artist @JBALVIN says “do your own research”.
On 2.13 when big names try to give you crypto advice – sound #CryptoCelebAlert and grab 1/2222 NFTs of basketball star @JimmyButler!
Learn more ⬇️https://t.co/3rC7r0uJ8M pic.twitter.com/Hml8AN2aEs
– Binance (@binance) February 7, 2022
As Cointelegraph reported, Binance’s ultimate aim with this campaign was to direct new users to its own platform, as well as to the educational crypto primer tools on its website.