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A federal judge in California has dismissed a class action suit against several notable celebrities, including Kim Kardashian and Floyd Mayweather, for promoting the cryptocurrency EthereumMax (EMAX). The lawsuit was first filed in January.
The judge reportedly stated that it was unclear if the plaintiffs had seen the specific promotions shared by the celebrities. Judge Michael Fitzgerald also said that investors should be expected "to act reasonably before basing their bets on the zeitgeist of the moment."
Despite the dismissal, Judge Fitzgerald said the plaintiffs can refile with amended claims.
Plaintiffs' lawyers argued that the high-profile celebrities colluded with the crypto project's co-founders Steve Gentile and Giovanni Perone to pump the tokens price (only to leave investors high and dry after it dropped).
"Defendants touted the prospects of the company and the ability for investors to make significant returns due to the favorable 'tokenomics' of the EMAX Tokens," the plaintiffs argued in a complaint filed in the U.S. District Court of the Central District of California. "In truth, defendants marketed the EMAX Tokens to investors so that they could sell their portion of the float for a profit."
Kardashian's crypto adventures
Though the lawsuit is off the table, Kardashian did have to pay a $1.26 million fine to the Securities and Exchange Commission in October for her promotions of EthereumMax.
The SEC charged the reality television star with failing to disclose that she had been paid $250,000 to promote the project on her Instagram.
"This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors," SEC Chair Gary Gensler said in a statement at the time. "We encourage investors to consider an investment’s potential risks and opportunities in light of their own financial goals."