Celebrity defendants Kim Kardashian and Floyd Mayweather are once again facing a class-action lawsuit regarding their alleged involvement in the promotion of the now-defunct cryptocurrency token EthereumMax (EMAX). Although the initial lawsuit was dismissed in December 2022, a recent ruling by U.S. District Judge Michael Fitzgerald has allowed the plaintiff’s “unfair competition” claims against Kardashian and Mayweather to proceed.

In January 2022, a class-action suit was filed against Kardashian and Mayweather, accusing them of participating in a “pump and dump” scheme by endorsing EMAX. However, the lawsuit was dismissed by a federal judge in California. In the latest ruling on June 6, Judge Fitzgerald refused to dismiss the claims, stating that the celebrities had engaged in unfair practices by promoting the token without disclosing their financial incentives.

Judge Fitzgerald stated that the amended 162-page complaint includes new defendants, such as NBA star Paul Pierce, and several new claims. The complaint alleges that Kardashian, Mayweather, and Pierce profited from endorsing an investment opportunity that lacked a legitimate business plan, thus exploiting their fans. The judge criticized the defendants for failing to present any arguments in their favor, emphasizing that the practice of hyping a crypto token without disclosure is unscrupulous and unfair.

 

While Judge Fitzgerald allowed the lawsuit to proceed, he also requested that the class-action lawyers from Scott+Scott explain how the celebrity endorsements affected the token’s prices. Sean Masson of Scott+Scott argued that misleading celebrity endorsements were integral to the EMAX business model. This indicates that the plaintiff’s lawyers will need to demonstrate the impact of the defendants’ promotion on investors and the token’s valuation.

Kardashian endorsed the EMAX token through an Instagram post in June 2021, while Mayweather sported the EMAX logo on his boxing trunks during a match against YouTube star Logan Paul that same month. The Securities and Exchange Commission (SEC) later charged Kardashian in October 2022 for unlawfully promoting a crypto security, resulting in her agreement to pay $1.26 million in penalties.

The class-action lawsuit against Kim Kardashian and Floyd Mayweather regarding their promotion of EthereumMax continues to move forward. The recent ruling by Judge Michael Fitzgerald highlights the importance of disclosing financial incentives when endorsing cryptocurrency tokens. As the case progresses, the plaintiff’s lawyers will need to demonstrate the impact of the defendants’ promotion on the token’s prices, while the actual damages sought by the class-action suit remain unspecified.

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