After a court tentatively dismissed their case, reality TV star Kim Kardashian, former boxer Floyd Mayweather Jr. and others may win an investor lawsuit against them over their sponsorship of the obscure cryptocurrency EthereumMax (EMAX).
EthereumMax, often known as EMAX, is a token that utilizes the Ethereum (CRYPTO: ETH) blockchain, which powers the second-largest cryptocurrency in the world. EMAX is currently down 99.97% from its all-time high set on May 29, 2021.
Celebrities promoted the token last year, which did not have any real-world utility.
In a January complaint, Kardashian was named along with Mayweather and NBA Hall of Famer Paul Pierce as those who hyped EMAX tokens to get investors to pay more for the crypto.
In order to settle accusations connected to Kardashian's promotion of EMAX, primarily her lack of disclosure of receiving a $250,000 payment, she was fined $1.26 million by the Securities and Exchange Commission (SEC) last month.
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Despite the large settlement, Kardashian, who has over 333 million followers on Instagram, neither acknowledged nor denied the regulator's accusations.
Investors Attorneys Trying To Act Like The SEC: Judge
The investors' attorneys were "trying to act like" the SEC, said U.S. District Judge Michael Fitzgerald in Los Angeles on Monday. He added that the plaintiff's lawyers "haven't chosen to view the tokens as a security" because they did not make a standard claim of securities fraud, Bloomberg reported.
According to Fitzgerald, Kardashian and her co-defendants did not care to label the tokens as a security “for obvious reasons.”
The judge further said that he would soon issue a formal written order.
Why Did The SEC Go Hammer And Tongs Against Kardashian?
The high-profile case was taken up by the SEC, according to its Chairman Gary Gensler, because the Instagram post did not disclose Kardashian's compensation for endorsing EMAX, which is a requirement when advertising securities.
Later, Kardashian's post was referred to as a "financial promotion with the single largest audience reach in history," by Charles Randell, chair of the UK Financial Conduct Authority.
Photo: Courtesy of Eva Rinaldi on flickr