A US judge has thrown out a lawsuit against Kim Kardashian and Floyd Mayweather over allegedly misleading fans over the purchase of crypto currency.
Both celebrities were accused of using their wide fan bases to promote the purchase of EMAX tokens to “dupe” potential investors and increase the value of the currency.
Such so-called “pump and dump” schemes involves artificially raising the price of the currency through the spreading of misleading information or promotion before selling it off.
Documents obtained by the PA news agency in January showed the value of the EMAX tokens, created by company EthereumMax, shot up in 2021 allegedly thanks to promotion by the influencers.
A ruling on Wednesday, also obtained by PA, acknowledged that the case raised “legitimate concerns” about the ability of celebrities to persuade fans to “buy snake oil with unprecedented ease and reach”.
But US District judge Michael Fitzgerald said the law expected investors to “act reasonably before basing their bets on the zeitgeist of the moment”.
“This action demonstrates that just about anyone with the technical skills and/or connections can mint a new currency and create their own digital market overnight,” the ruling read.
“Likewise, the action emphasises the power of social media in allowing celebrities to directly communicate with their millions of fans with a touch of a button.
“These two facts, together, have seemingly allowed unvetted and highly volatile investment ventures to go viral based solely on the paid-for word of celebrity promoters.
“Losses have inevitably followed. The Court acknowledges that this action raises legitimate concerns over celebrities’ ability to readily persuade millions of undiscerning followers to buy snake oil with unprecedented ease and reach.
“But, while the law certainly places limits on those advertisers, it also expects investors to act reasonably before basing their bets on the zeitgeist of the moment.”
Plaintiffs in the case may file an amended complaint by no later than December 22nd, 2022, the documents said.
