A recent class-action case has demanded a jury trial against big stars and social media influencers for their alleged influence in a classic pump and dump scheme related to Binance Smart Chain-native cryptocurrency SafeMoon.
The token allegedly used multiple star faces to attract investors with misleading promotions. Some of the big names roped in by the class action are musicians like Soulja Boy, Nick Carter, Lil Yachty. It also includes several YouTubers, including Ben Philips and Jake Paul.
SafeMoon and its subsidiaries, according to the lawsuit, imitated real-life Ponzi schemes by deceiving traders into buying SafeMoon coins under the guise of unrealistic earnings.
SafeMoon drop and C-suite executives departure
The hired celebrities allegedly encouraged their fans to invest 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 boosting the token’s trading volume and price. While SafeMoon experienced multifold growth in the past few months, the abrupt departure of the company’s C-suite executives correlated with a drop in token prices.
Slow rug pull
The lawsuit claims that the celebrities engaged tried a “slow rug pull,” meaning a gradual sell-off of holdings while trading volume from normal investors remains overvalued:
“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 seeks to represent and compensate everyone who purchased SafeMoon tokens between March 8, 2021, and March 8, 2021, and were sufferers of the alleged rug-pulling activity.
In the midst of the media frenzy around the ads, crypto exchange giant Binance started a marketing effort to warn investors about the impending crypto hype fed by mainstream stars.
Superstars ≠ crypto experts.
Music artist @JBALVIN says “do your own research”.
— Binance (@binance) February 7, 2022