On Nov. 7, a federal judge dismissed the class action lawsuit filed by investors against the inventors of the cryptocurrency EthereumMax (EMax), as well as celebrity endorsers like Kim Kardashian and boxer Floyd Mayweather Jr. and others for their marketing of the cryptocurrency on social media. The investors had claimed that the celebrity endorsers engaged in deceptive and unfair practices in their promotion of the cryptocurrency.
In addition, the complaint alleges that officials from EthereumMax conspired with celebrity marketers to entice investors to purchase the EMax token, which drove up the price of the token and allowed the executives to sell their own tokens for a profit.
In his written decision, Judge Michael Fitzgerald acknowledged that the lawsuit’s allegations highlighted valid concerns about the potential of celebrities to easily convince millions of gullible followers to purchase snake oil with unparalleled ease and reach.
Fitzgerald found that the investors did not explain how the celebrities acted to further the alleged conspiracy, even though certain promoters were paid in EMAX token. He said that the they had only promoted EMAX because of the personal gain it would bring them.
Fitzgerald, of the Central District of California, wrote that the law does place limitations on those advertisers, but it also expects investors to act reasonably before basing their bets on the zeitgeist of the moment. This is the case even though the law does place limitations on those advertisers.
Furthermore, Fitzgerald added that he would allow attorneys for the plaintiffs to refile their suit after amending some of their claims under a number of the statutes that were cited in the initial complaint. One of these statutes was the Racketeer Influenced and Corrupt Organizations Act, which is more commonly referred to as RICO.