A judge seems poised to dismiss a lawsuit accusing celebrities, including Kim Kardashian, of misleading investors over EthMax.
In Jan., investors filed a class-action lawsuit against Kardashian, as well as other celebrities, accusing them of perpetrating a scam.
The investors claimed that celebrity endorsements had misled them into buying cryptocurrency EthereumMax at “inflated prices.”
Other defendants in the proposed lawsuit include ex-boxing champion Floyd Mayweather Jr. and former NBA star Paul Pierce.
Judge Says Prosecution Argument Lacks Consistency
Now, U.S. District Judge Michael Fitzgerald has expressed his intention to dismiss the lawsuit in a written order. He said that despite “trying to act like” the Securities and Exchange Commission (SEC), the prosecution’s argument lacks consistency with the authority’s approach.
SEC Chair Gary Gensler has said he believes most cryptocurrencies are effectively securities, which issuers should register with the authority. The SEC is pursuing a high-profile case against Ripple Labs on that basis. They insist that the XRP token is a security that Ripple illegally issued without registering properly.
However, in the case against the celebrities, the prosecution did not argue that the EthMAX (EMAX) tokens were securities. They also neglected to invoke a standard securities fraud claim in their case.
The judge also pointed out that the celebrities did not promote the tokens as securities. Fitzgerald concluded saying he would later issue a final ruling on the matter.
Kardashian Fined Over $1m for Shilling EthereumMax
The ruling will come as a relief to Kardashian, who has faced additional scrutiny for her promotion of EMAX. Last month, the SEC fined Kardashian for failing to disclose the payment she received for promoting the crypto asset. Kardashian settled the charges by paying $1.26 million. This included a $1 million, in addition to the $250,000 she received for the promotion, plus additional interest.
Other celebrities have also lost millions due to their cryptocurrency choices, albeit through investments, not fines. American rapper Lil’ Baby admitted to losing millions to crypto, in a recent interview. Meanwhile, football star Neymar and musicians Madonna and Eminem saw substantial losses from investing in Bored Ape Yacht Club NFTs.