April 19, 2024
Policy & Regulation

Court Allows Case Against Kim Kardashian and Public Figures to Move Forward in EMAX Scandal

A California judge ruled on Tuesday that the social media endorsements of EthereumMax (EMAX) made by reality TV star Kim Kardashian were false, allowing the case against her and other public figures to proceed. The lawsuit, which gained attention last year, was filed by investors accusing Kardashian, retired boxer Floyd Mayweather Jr., and National Basketball Association Hall of Famer Paul Pierce, among others, of misleading investors through the promotion of digital assets linked to EMAX tokens. These tokens are built on the Ethereum blockchain but are not directly tied to the second-largest cryptocurrency by market cap.

While a preliminary ruling in December indicated that District Court Judge Michael Fitzgerald was inclined to dismiss the allegations against Kardashian, her attempt to have an amended complaint dismissed was denied in a recent order. The order noted that the plaintiffs significantly expanded their previous complaint by adding over 100 pages of new allegations.

According to the expanded complaint, the plaintiffs “adequately alleged” that Kardashian’s social media posts from May 2022 were false and that a June post was misleading as it falsely implied that EMAX tokens were scarce.

Pierce’s motion to dismiss similar claims was denied, whereas Mayweather’s motion was partially granted because his comments about EMAX at the Bitcoin 2021 conference were considered expressions of belief.

Judge Fitzgerald also ruled in favor of dismissing several securities claims included in the plaintiffs’ amended complaint, citing a lack of specificity but not a lack of privity. However, the plaintiffs have the opportunity to amend these claims.

EMAX Holdings LLC and the other defendants argued that the investors, who did not mention securities in their initial complaint filed a year ago, now assert that the purchases of EMAX Tokens are and have always been “investment contracts.”

In October, Kardashian was fined $1.2 million by the U.S. Securities and Exchange Commission for promoting EMAX to her millions of Instagram followers.

The plaintiffs have until June 26 to make a final amendment to their complaint.

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