A federal judge in California has cleared the way for investors to pursue state-level class actions against celebrities and other promoters of the EthereumMax (EMAX) token, while rejecting a broader nationwide claim.
Key Takeaways:
- A judge allowed state-level EMAX class actions in NY, CA, FL, and NJ to proceed but rejected a nationwide class.
- Claims target Kim Kardashian, Floyd Mayweather, Paul Pierce, and others linked to EMAX’s creation.
- The token’s 2021 surge of 116,000% was followed by a 99% crash, sparking investor losses and lawsuits.
In a Wednesday order, US District Judge Michael Fitzgerald granted a motion allowing class actions in New York, California, Florida, and New Jersey to proceed.
The cases involve investors who bought EMAX between May and June 2021, a period when the token’s price spiked over 116,000% before collapsing more than 99%.
Judge Says Proposed State Classes Meet Federal Procedural Standards
“Plaintiffs have demonstrated that the proposed state classes comport with the requirements of Federal Rules of Civil Procedure,” the ruling stated.
However, Fitzgerald found that a nationwide class would pose “too high” a risk of applying California and Florida law beyond their jurisdictions, and could lead to individualized questions not suited to collective resolution.
The decision keeps alive investor claims against high-profile figures including Kim Kardashian, Floyd Mayweather, and former NBA star Paul Pierce, all of whom publicly promoted EMAX.
It also targets individuals linked to the token’s creation, such as EMAX Holdings, co-founder Giovanni Perone, and alleged consultant Jona Rechnitz.
Kardashian’s promotion, posted to her Instagram Story in 2021, is believed to have reached up to 200 million users.
EthereumMax, described in its white paper as a “culture token,” became a viral name in crypto circles in mid-2021 due to celebrity endorsements.
Critics accused it of being a “pump and dump” scheme after the rapid price surge was followed by an almost total collapse, leaving retail investors with heavy losses.
8. The Kardashians
The Kardashians were fined by the SEC for failing to disclose payments from the EthereumMax crypto project. pic.twitter.com/2TQYNKk1Np— Evan Luthra (@EvanLuthra) June 1, 2024
Fitzgerald had previously dismissed the lawsuit in December 2022, reasoning that buyers were responsible for conducting due diligence before investing.
However, he allowed plaintiffs to refile, which they did seven months later in the same court.
Separately, Kardashian settled with the US Securities and Exchange Commission in October 2022 for $1.2 million over charges she failed to disclose a $250,000 payment to promote the token.
Ex-NBA Star Paul Pierce Fined $1.4M in EthereumMax Promotion Case
In 2023, the SEC also charged former NBA player Paul Pierce with violating anti-fraud and anti-touting rules by promoting the EthereumMax cryptocurrency. Pierce agreed to settle the charges and pay $1.409 million in penalties.
The regulator charged the NFT star for touting EMAX tokens, cryptocurrencies sold by EthereumMax, on social media without disclosing the payment he received for the promotion and for making false and misleading statements regarding the token.
The commission detailed that Pierce received more than $244,000 worth of EMAX tokens to promote the project on Twitter.
On one special occasion, Pierce tweeted a screenshot of an account showing large holdings and profits without disclosing that it was not his own personal holdings.
The NBA star agreed to settle the charges by paying $1.4 million in penalties, disgorgement and interest “without admitting or denying the SEC’s findings,” the commission said.
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