A high court judge put an end to the lawsuit against the promoters of a cryptocurrency on Wednesday. EthereumMax was the subject of the case, with the plaintiffs citing celebrity endorsers such as Kim Kardashian and Floyd Mayweather Jr. as having unduly influenced them to invest in the crypto.
The claimants argued that they had suffered losses because they had trusted the opinions of influential stars concerning the value of the cryptocurrency. It was alleged that the defendants had conspired together in an attempt to artificially inflate the EMAX tokens’ worth.
Judge Michael Fitzgerald of the Central District of California recognized the lawsuit’s legitimate issues about the “ability of celebrities to easily persuade millions of undiscerning followers to purchase snake oil with unprecedented ease and scope.” Nevertheless, he asserted that the law expected investors to act reasonably before investing in the current trend.
The judge suggested that the allegations made by the plaintiffs were not adequately substantiated, and therefore he dismissed the class action lawsuit. In addition to Kardashian and Mayweather, the case also included former Boston Celtics star Paul Pierce, EthereumMax co-founders Steve Gentile and Giovanni Perone, and cryptocurrency consultant and developer Justin French.
Fitzgerald said that the plaintiffs’ attorneys could refile their lawsuit after amending some claims under the variety of statutes cited in the original complaint, including the Racketeer Influenced and Corrupt Organizations Act (RICO). Michael Rhodes, Kardashian’s lawyer, stated that they were pleased with the court’s decision.
The termination of the case came shortly after investors in the defunct crypto-exchange FTX filed a lawsuit against its former CEO Sam Bankman-Fried and celebrity advertisers such as NFL star Tom Brady for allegedly exaggerating the value of the crypto tokens in promotions.
The ruling was issued two months after Kardashian settled with the SEC over a $250,000 promotion payment that was not disclosed by the agency. Kardashian was ordered to pay a penalty of $1.26 million and the cryptocurrency was prohibited from being sold on the market for three years.
Fitzgerald’s ruling highlights the larger conflict surrounding celebrity endorsement schemes and influencer marketing plans. “This action demonstrates that almost anyone with the technical skills and/or connections can mint a new coin and create their own digital marketplace overnight,” the judge wrote.
The lawsuit against EthereumMax was first filed by investors in January, when a multitude of influencers began to endorse cryptocurrencies to their millions of followers. Kardashian shared a post on Instagram in June 2021, writing, “Are you guys interested in crypto? This is not financial advice, but sharing what my friends told me about the Ethereum Max token.” The post was marked with the hashtag “#ad” to indicate that it was sponsored, but the $250,000 payment was not disclosed.
Mayweather promoted the EMAX token at a boxing match and a major Bitcoin conference in Miami in June 2021. However, by January the cryptocurrency had depreciated by 97%. At a hearing last month, Fitzgerald indicated that he was likely to dismiss the case.
An article by Bloomberg News about the hearing reported that a lawyer representing the plaintiffs in the suit asked the judge to review the lawsuit’s extortion claims and demonstrate how the statements made by the famous defendants had hurt investors.
“Had the plaintiffs known the true facts relating to the promoters’ financial interest in the tokens, and that they were being paid to sell these tokens, they would not have paid as much for the tokens as they did,” attorney John Jasnoch told Fitzgerald, according to a transcript quoted by Bloomberg.
