Key takeaways:
- Kim Kardashian and Floyd Mayweather are again at the center of a class action complaint alleging unlawful promotion of the EMAX token.
- According to Judge Fitzgerald, promoting a cryptocurrency token without revealing that you are being paid is an “unscrupulous and thereby unfair practice.”
Kim Kardashian and Floyd Mayweather, two well-known defendants, are again at the center of a class action complaint alleging unlawful promotion of the since-defunct cryptocurrency token EthereumMax (EMAX).
The class-action lawsuit against the two was filed in January 2022 for allegedly endorsing a “pump and dump” plan, but a federal judge in California dismissed it in December 2022.
With regard to the plaintiff’s “unfair competition” claims against reality TV star Kardashian and boxing champion Mayweather for their roles in advertising the EMAX token in 2021, U.S. District Judge Michael Fitzgerald did not agree to dismiss them in a revised decision on June 6.
The 162-page case, which claims that Paul Pierce of the NBA and boxer Floyd Mayweather profited from sponsorships at the expense of their followers by promoting an investment opportunity with no real business strategy, has now been amended by the judge. Judge Fitzgerald said:
“The court is essentially dealing with an entirely new complaint, with new defendants and several new claims,”
According to Judge Fitzgerald, promoting a cryptocurrency token without revealing that you are being paid to do so is an “unscrupulous and thereby unfair practice.” He continued by saying that the famous defendants did not present any grounds to shift the scale in their favor.
“Defendants do not offer a single benefit of allowing celebrities to endorse unvetted products without disclosing that they are being paid to do so.”
He did warn that the Scott+Scott class-action attorneys would have to detail how the celebrity’s advocacy of the token affected its costs. According to Reuters, Sean Masson of Scott+Scott claimed that the entire foundation of the Emax business strategy consisted of false celebrity endorsements.
In a June 2021 Instagram post, Kardashian promoted the EMAX token, and the same month, Mayweather competed against YouTube personality Logan Paul while sporting the EMAX logo on his boxing trunks.
Although it has nothing to do with Ethereum, EthereumMax’s whitepaper describes it as a “culture token” that bridges the gap between the advent of community tokens and the well-known basic coinage of cryptocurrency.
The Securities and Exchange Commission (SEC) filed a complaint against Kardashian in October 2022 for improperly promoting cryptocurrency security. She consented to pay fines totaling $1.26 million for participating in the EMAX marketing.
Although specific dollar amounts were not stated, the class action sought damages for investors who purchased the token after hearing about it from celebrity shills.
