While the celebrities paid a high price to the Securities and Exchange Commission for their roles in promoting Ethereum Max, they've so far avoided a class action lawsuit.
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Celebrities including reality TV star Kim Kardashian, NBA pundit Paul Pierce and boxing great Floyd Mayweather have asked a federal judge to once again throw out a class action lawsuit over their endorsement of the EthereumMax token.
Back in December, U.S. District Judge Michael Fitzgerald tossed a lawsuit accusing the three and others of aiding in a "pump and dump" by inflating the price of the token via their celebrity. That was the second version of the suit, and it floundered on several points, among them proving that the plaintiffs were actually influenced by the big names.
Ethereum Max, or EMAX, was not affiliated with Ethereum and shortly after the ICO crashed to virtually worthless.
They were not so lucky with the Securities and Exchange Commission, which forced Kardashian to pay $1.26 million and Pierce $1.4 million over their promotions. However, the regulator's problem was that they and other celebs failed to disclose the amount that they were paid for their promotions.
Just saying you're a paid promoter isn't enough when it comes to securities — Kardashian's Instagram post did have "#ad" but not that she was paid $250,000. Back in 2018, Mayweather was fined more than $600,000 by the SEC for the same reason, and argued that just wearing EMAX logos wasn't sufficient in an earlier version of the lawsuit.
The filing noted that Judge Fitzgerald previously found the pump-and-dump "theory implausible because the tokens have no worth outside of what the market is willing to pay for them in real time."
It also argues that the new complaint fails "to plausibly allege that defendants' alleged statements or omissions caused any cognizable injury" — arguing that the plaintiffs' new claim, that they were convinced to "hold on" to the EMAX, did not cause them to suffer any injury.
It added that they failed to "show that a 'reasonable consumer' exercising ordinary care would likely be misled by the Individual or Celebrity Defendants' statements" and that the claim that the celebrities aided and abetted fails to prove they had any knowledge of misdeeds by EMAX developers.
What the judge thinks this time remains to be seen.
