Kim Kardashian and Floyd Mayweather, both celebrity defendants, are once again facing a class action lawsuit that accuses them of promoting the defunct crypto token EthereumMax (EMAX) in an improper manner.
In January 2022, a class-action lawsuit was filed against the two individuals for allegedly engaging in a “pump and dump” scheme, however, in December 2022, the case was dismissed by a federal judge in California.
On June 6, U.S. District Judge Michael Fitzgerald denied a motion to dismiss the “unfair competition” accusations against reality TV celebrity Kardashian and boxer Mayweather for their involvement in the promotion of the EMAX token in 2021.
The judge has now determined it is appropriate to alter the 162-page complaint that claims Kardashian, Mayweather, and NBA star Paul Pierce “were taking advantage of their fans by promoting an investment opportunity with no genuine business strategy.”
Fitzgerald stated that the court is essentially handling a completely different complaint, involving new defendants and a multitude of new claims.
Judge Fitzgerald declared that promoting a crypto token without revealing that one has been compensated to do so is an “unconscionable and consequently unjust behavior.”
He stated that the celebrity defendants did not present any arguments that would sway the outcome in their favor.
He warned, however, that the attorneys from Scott+Scott involved in the class action lawsuit would have to demonstrate how the celebrity’s endorsement of the token impacted its prices.
Scott+Scott’s Sean Masson stated to Reuters that deceptive celebrity endorsements were at the core of the Emax business plan.
In June 2021, Kardashian promoted the EMAX token in a post on Instagram, while Mayweather sported the EMAX logo on his boxing trunks in a bout against YouTube star Logan Paul.
According to its whitepaper, EthereumMax purports to be a “culture token” that serves to connect the newly established community tokens with the already established foundational coins of the crypto world, although it is not affiliated with Ethereum in any way.
Related: Celebrities who were negatively impacted by endorsing crypto and those who were not affected.
In October of 2022, the Securities and Exchange Commission accused Kardashian of unlawfully promoting a crypto security. She settled the case, paying $1.26 million in penalties for her involvement in the EMAX campaign.
The class action sought compensation for investors who purchased the token after being influenced by the celebrity endorsements, although no specific amounts were identified.
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