A lawsuit accusing Kim Kardashian and Floyd Mayweather of misleading investors by promoting cryptocurrencies on social media has been dismissed.
Investors who bought EthereumMax tokens say they lost money after believing what celebrities said about the digital asset.
The lawsuit, filed in January, alleges that the defendants conspired to inflate the value of the tokens.
In Wednesday’s ruling, California District Judge Michael Fitzgerald said the case raised “legitimate concerns” about the celebrity’s ability to persuade fans to buy snake oil “with unprecedented ease and scope.”
But he added that the law still expects investors to “behave reasonably” before acting “according to the zeitgeist of the moment”.
Kardashian published an Instagram post in June 2021 saying: “Do you guys like cryptocurrencies??? This is not financial advice, but sharing what my friends told me about the Ethereum Max token.”
Her post included “#ad” at the bottom, indicating that she was sponsored, but did not disclose the $250,000 payment she received from EthereumMax.
Mayweather promoted the EMAX token at a boxing match and a Bitcoin conference in June 2021.
The value of EMAX tokens soared in 2021 — but by January, they had lost 97% of their value.
Along with Kardashian, Mayweather and former Boston Celtics star Paul Pierce, defendants in the case include EthereumMax co-founders Steve Gentile and Giovanni Perrone, as well as cryptocurrency advisors and developer Justin French.
“This action demonstrates that virtually anyone with technical skills and/or connections can mint a new currency overnight and create their own digital marketplace,” the judge’s ruling said.
“Similarly, the action underscores the power of social media, allowing celebrities to communicate directly with millions of followers at the touch of a button.
“These two facts combined seem to allow unvetted and highly volatile investment ventures to go viral based solely on paid speech from celebrity promoters.
“There was an inevitable loss to follow. The court acknowledged that this action raised legitimate concerns about the ability of celebrities to easily persuade millions of uncritical followers to buy snake oil with unprecedented convenience and influence.
“But while the law certainly imposes restrictions on these advertisers, it also expects investors to act reasonably before placing bets on the zeitgeist of the day.”
Kardashian’s attorney, Michael Rhodes, told NBC: “We are satisfied with the court’s reasonable decision in this case.”
Investors can reopen the lawsuit if they amend some of their claims by Dec. 22.
Two months ago, Kardashian agreed to pay $1.26 million (£1 million) and not promote cryptocurrencies for three years to settle a lawsuit brought by the SEC over her failure to disclose a $250,000 payment she had received. claim.