Kim Kardashian and Floyd Mayweather Jr. won a tentative court ruling dismissing a lawsuit accusing the celebrities of scamming investors in a cryptocurrency called EthereumMax.
(Bloomberg) — Kim Kardashian and Floyd Mayweather Jr. won a tentative court ruling dismissing a lawsuit accusing the celebrities of scamming investors in a cryptocurrency called EthereumMax.
Investors claimed in a January complaint they paid “inflated prices” for blockchain-based digital assets because the reality television star and ex-boxing champion hyped the EMAX tokens. Former Boston Celtic Paul Pierce was also named as a defendant in the proposed class-action suit.
US District Judge Michael Fitzgerald said Monday in a written order his “tentative view” is that lawyers for the investors are “trying to act like” the US Securities and Exchange Commission — but “haven’t chosen to view the tokens as a security” and didn’t invoke a standard securities fraud claim in their case.
Fitzgerald said the celebrities also didn’t “care to label the tokens as a security for obvious reasons.” The judge said he will issue a final written order later.
A lawyer for Kardashian declined to comment before a final ruling in the investor case is issued. An attorney for the investors didn’t immediately respond to a request for comment.
The ruling comes amid a broader debate over the SEC’s regulatory authority over crypto assets.
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The US markets regulator announced in October that Kardashian had agreed to pay $1.26 million to settle allegations that she broke US rules by touting EMAX tokens. The SEC said Kardashian didn’t disclose that she was paid $250,000 to post on her Instagram account about the tokens.
Kardashian settled without admitting or denying the SEC allegations. And she agreed to refrain from touting any additional digital assets for three years.
The law requires anyone who touts a security, such as a stock or even some types of cryptocurrencies, to not only say they are getting paid to do so, but also to disclose the amount, the source, and the nature of those payments.
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