A federal judge dismissed on Wednesday a lawsuit against celebrity endorsers of the cryptocurrency EthereumMax accusing them of fraudulently misleading their followers into buying EMAX tokens only to sell their stakes once its value was inflated.
The proposed class action alleged the celebrity promoters, including Kim Kardashian, Floyd Mayweather and Paul Pierce, conspired with the founders of the cryptocurrency to dupe investors into purchasing EMAX tokens using their endorsements in a pump-and-dump scheme.
While the case raises “legitimate concerns” over the ability of celebrities to persuade undiscerning followers to buy “snake oil with unprecedented ease and reach,” U.S. District Judge Michael Fitzgerald found that there’s an expectation for “investors to act reasonably before basing their bets on the zeitgeist of the moment.”
The ruling spells trouble for other suits against endorsers of crypto platforms. In November, FTX investors sued a host of celebrities, including Larry David, Tom Brady and Stephen Curry, in a proposed class action for promoting what they called a “Ponzi scheme” that fraudulently shuffled customer funds between its affiliated entities.
The suit brought by EMAX investors detailed a racketeering conspiracy in which the creators of the token conspired with celebrity endorsers to implement a pump-and-dump scheme.
But Fitzgerald reasoned that the Private Securities Litigation Reform…
