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The lawsuit filed in January claims EthereumMax
executives schemed with celebrity promoters to induce investors
to buy the EMax token, driving up its price and allowing them to
sell their own tokens at a profit.
U.S. District Judge Michael Fitzgerald in Los Angeles said that
the investors may amend and refile their proposed class action.
The decision comes as other celebrity promoters face lawsuits
from users of the failed cryptocurrency exchange FTX, whose
collapse has deepened an ongoing "crypto winter."
Sean Masson, an attorney who represents the investors in the
EthereumMax case, said they plan to revise their claims to add
"a host of additional facts demonstrating defendants' wrongdoing
and liability."
Michael Rhodes, the lead attorney for Kardashian, said the
defense is "pleased with the court's well-reasoned ruling."
Attorneys for Mayweather did not immediately respond to a
request for comment. Also named in the lawsuit was former
National Basketball Association star Paul Pierce.
Kardashian promoted EthereumMax in a June 2021 post on Instagram,
and Mayweather wore the company's logo on his boxing trunks
during a widely viewed fight, the investors said.
In Wednesday's ruling, Fitzgerald said that investors had failed
to show that the executives and promoters schemed to mislead
investors, rather than acting in their own self-interest.
The investors' fraud claims failed because they had not stated
whether or when they saw the promotions, the judge wrote.
While the investors may revise those claims, Fitzgerald
permanently dismissed their claim under California's consumer
protection law, which he said applies to tangible goods and
services, not "intangible goods" such as cryptocurrency.
Kardashian agreed in October to pay the SEC $1.26 million to
settle claims that she failed to disclose she was paid to
promote EthereumMax tokens. She did not admit wrongdoing.
The case is In Re: Ethereummax Investor Litigation, No.
22-00163.
(Reporting by Jody Godoy in New York; Editing by Noeleen Walder
and Matthew Lewis)
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