According to the new proposed class action, SafeMoon enlisted the help of a number of celebrities to entice investors with deceptive advertising.
A new class-action complaint seeks a jury trial for A-list celebrities and social influencers accused of participating in a traditional pump-and-dump operation involving SafeMoon tokens.
SafeMoon, a Binance Smart Chain-native cryptocurrency, is accused of enlisting the help of a number of celebrities to entice investors with deceptive marketing. Nick Carter, Soulja Boy, Lil Yachty, and YouTubers Jake Paul and Ben Phillips are among the celebrities named in the class action lawsuit.
SafeMoon and its subsidiaries, according to the lawsuit, imitated real-life Ponzi schemes by deceiving investors into purchasing SafeMoon tokens under the guise of unachievable earnings.
The recruited celebrities allegedly persuaded their fans to buy in SafeMoon by citing the ecosystem’s ‘burn’ and ‘tokenomics’ as significant drivers for the token’s price potential.
Furthermore, the lawsuit cites multiple occasions in which the hired celebrities were effective in artificially inflating the token’s trading volume and price. While SafeMoon experienced multifold growth over several months, the sudden departure of the company’s C-suite executives coincided with a drop in token values, as shown in the graph below (marked in yellow):
The lawsuit claims that the celebrities engaged attempted a “slow rug pull,” meaning a gradual sell-off of shares while trading volume from normal investors remains inflated:
“Due to the Promoter Defendants’ improper advertising efforts, all of the Defendants were able to sell their SAFEMOON Tokens to naïve investors.”
The lawsuit seeks to represent and recompense all anyone who purchased SafeMoon tokens between March 8, 2021 and March 8, 2021 and were victims of the alleged rug-pulling attempt.
The crypto advertisements were one of the main attractions of Super Bowl 2022. In the midst of the media frenzy surrounding the ads, crypto exchange Binance started a marketing effort to caution investors about the impending crypto euphoria fed 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
Binance’s ultimate goal with this campaign was to drive new users to its platform as well as to its website’s instructional crypto primer products.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.