Opinions expressed by Entrepreneur contributors are their own.
Since crypto winter began in the summer of 2022, celebrities have learned some hard lessons about the dangers of shilling new products. Several, including Kim Kardashian and Floyd Mayweather Jr., managed to avoid court-ordered payouts after a California judge dismissed the lawsuit against them, concluding that investors were unaware of the celebs’ promotional efforts.
In January, a lawsuit was filed claiming that EthereumMax executives and celebrity promoters took part in a scheme meant to induce investor purchases of EMax tokens — an action that drove up the cryptocurrency‘s price, netting significant profits once the celebs and execs sold their holdings.
US 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.”
Attorney Sean Masson represented the plaintiffs in the EthereumMax suit. He indicated plans to change investors’ claims by adding “additional facts demonstrating defendants’ wrongdoing and liability.”
CNN also quoted Kim Kardashian’s attorney Michael Rhodes, who had no complaints, saying reps for the celebs were happy with what he termed “the court’s well-reasoned ruling.”
Judge Michael Fitzgerald explained his dismissal by stating that the plaintiffs could not prove any intention to mislead investors. Additionally, investors didn’t say whether they’d seen the promotions, such as Mayweather sporting an EthereumMax logo on his trunks in the ring or Kardashian’s Instagram posts.
The claim was permanently dismissed. According to Judge Fitzgerald, the California statute protects consumers regarding fraud related to real-world products or services — cryptocurrency is considered intangible. However, aggrieved investors may still get their day in court, as they can file suit again once they’ve revised their claims.
