An investor-led class action lawsuit against EthereumMax’s creators and celebrity backers Kim Kardashian and Floyd Mayweather Jr. over their social media promotion of the cryptocurrency was dismissed by a federal judge on Wednesday.
Investors who purchased EMAX tokens claimed they had lost money after believing the celebrity influencers about the value of cryptocurrencies. According to the lawsuit, the defendants conspired to unnecessarily inflate the value of EMAX tokens.
Judge noted that he recognized worries about celebrities including Kim Kardashian
According to the judge’s ruling, Michael Fitzgerald, “celebrities’ ability to readily compel millions of followers to buy snake oil with unprecedented ease and reach” is a legitimate concern raised by the lawsuit’s claims.
“But, while the law certainly places limits on those advertisers, it also expects investors to act reasonably before basing their bets on the zeitgeist of the moment.”
wrote Fitzgerald, of the Central District of California
According to the judge’s decision in U.S. District Court in Los Angeles, the plaintiffs’ claims were not sufficiently supported, particularly “given the heightened pleading standards” for fraud claims.
According to court documents, the plaintiffs in the case included Steve Gentile and Giovanni Perone, the co-founders of EthereumMax, as well as Justin French, a consultant, and developer for the cryptocurrency, in addition to Kim Kardashian, Mayweather, and former Boston Celtics star Paul Pierce.
In his decision, Fitzgerald stated that he would permit the plaintiffs’ attorneys to resubmit their lawsuit after revising some of their claims under a number of the laws cited in the initial complaint, including the Racketeer Influenced and Corrupt Organizations Act, or RICO.
The dismissal came after investors in the defunct cryptocurrency exchange FTX submitted a class-action lawsuit against former FTX CEO Sam Bankman-Fried and celebrity clients of the business, including Tom Brady of the NFL. They claimed that they had overstated the value of the company’s cryptocurrency tokens in their marketing materials.
The decision also came two months after Kim Kardashian agreed to settle SEC allegations that she failed to disclose a $250,000 payment for promoting EthereumMax on her Instagram account by paying $1.26 million and refraining from promoting cryptocurrencies for three years.
In his decision on Wednesday, Fitzgerald stated that the EthereumMax lawsuit is part of a larger controversy involving celebrity and influencer promotional tactics.