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EMAX investors given third and final chance at celeb promo suit

The judge presiding over a class suit by EMAX token investors gave them a final chance to file their claims against celebrities who allegedly promoted it.

The plaintiffs of the EthereumMax (EMAX) investor class action lawsuit have been given a final chance to amend their claims against the celebrities they accuse of promoting the now-defunct cryptocurrency. 

In an Oct. 3 court order, United States District Court Judge Michael Fitzgerald said he’s giving the EMAX investors a third and final chance to submit an amended complaint.

The class-action suit was brought against boxer Floyd Mayweather, NBA star Paul Pierce, reality TV star Kim Kardashian, and others in 2022 for allegedly promoting EMAX which the suit called a “pump and dump” scheme.

The judge dismissed the suit last year but revived it again in June refusing to throw out the plaintiff’s “unfair competition” claims against the celebrities. Four motions were dealt with in the new order.

An excerpt of Judge Fitzgerald's order explaining the motions that were before the court .Source: CourtListener

The court denied Mayweather's motion to dismiss the state consumer law claims, finding the plaintiffs sufficiently alleged materiality and Mayweather's failure to disclose that he was a paid promoter.

It also denied Pierce's motion to dismiss the state consumer law claims and manipulation claim, finding it was sufficiently alleged that Pierce or his agent sold and traded tokens for his benefit.

The court denied one of EMAX cofounder Giovanni Perone's motions to dismiss the same consumer claims but granted to amend dismissal of the securities claims for failing to allege Perone personally sold tokens.

The court said that the plaintiffs must re-file the complaint and the defendants must answer the remaining claims with Judge Fitzgerald writing:

“Plaintiffs have repeatedly failed to cure the deficiencies identified by the Court and were explicitly warned that this would be their last opportunity to amend.”

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According to its whitepaper, EthereumMax — which is not related to Ethereum — claimed to be a “culture token” that “bridges the gap between the emergence of community tokens and the well-known foundational coins of crypto.”

In October 2022, the U.S. Securities and Exchange Commission charged Kim Kardashian for unlawfully promoting the token as a security. She agreed to pay $1.26 million in penalties for her involvement.

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EMAX class action against Kim K and Mayweather is back on, says judge

While a federal judge dismissed the lawsuit last year, U.S. District Judge Michael Fitzgerald has given the plaintiffs a new chance at pursuing action against the celebrities.

Celebrity defendants Kim Kardashian and Floyd Mayweather are back on the hook for a class action lawsuit that alleges their improper promotion of the now-defunct crypto token EthereumMax (EMAX).

While the class-action suit was brought against the pair in January 2022 for allegedly promoting a “pump and dump” scheme, it was dismissed by a federal judge in California in December 2022.

However, in a new ruling on June 6, U.S. District Judge Michael Fitzgerald refused to throw out the plaintiff’s “unfair competition” claims against reality TV star Kardashian and boxing champion Mayweather for their role in promoting the EMAX token in 2021.

The judge has now seen it fit to amend the 162-page complaint alleging that Kardashian, Mayweather, and NBA star Paul Pierce “were profiting off endorsements at their fans’ expense by touting an investment opportunity that had no legitimate business plan.”

“The court is essentially dealing with an entirely new complaint, with new defendants and several new claims,” said Fitzgerald.

Excerpt from Ruling in Case CV 22-00163-MWF. Source: Thomson Reuters

Judge Fitzgerald said that hyping a crypto token without disclosing that you’ve been paid to do so is an “unscrupulous and thereby unfair practice.”

He added that the celebrity defendants provided no arguments to tip the balance in their favor.

“Defendants do not offer a single benefit of allowing celebrities to endorse unvetted products without disclosing that they are being paid to do so.”

However, he cautioned that the class-action lawyers from Scott+Scott would have to explain how the celebrity’s promotion of the token affected its prices.

Sean Masson of Scott+Scott said that misleading celebrity endorsements were the very essence of the Emax business model, according to Reuters.

Kardashian plugged the EMAX token in a June 2021 post on Instagram, while Mayweather wore the EMAX logo on his boxing trunks in a match against YouTube star Logan Paul in the same month.

According to its whitepaper, EthereumMax claims to be a “culture token” that “bridges the gap between the emergence of community tokens and the well-known foundational coins of crypto,” though it has nothing to do with Ethereum.

Related: Celebs who got burned endorsing crypto and those that got away with it

In October 2022, the Securities and Exchange Commission charged Kardashian for unlawfully touting a crypto security. She agreed to pay $1.26 million in penalties for her involvement in the EMAX promotion.

The class action sought damages for investors that bought the token following the celebrity shills though actual amounts were not specified.

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Celebrities Kim Kardashian, Paul Pierce, Floyd Mayweather and Others Ask Court To Drop New EthereumMax Lawsuit

Celebrities Kim Kardashian, Paul Pierce, Floyd Mayweather and Others Ask Court To Drop New EthereumMax Lawsuit

Defendants involved in the EthereumMax (EMAX) lawsuit are requesting that the California Central District Court dismiss the latest charges brought against them. In December, U.S. District Judge Michael W. Fitzgerald tossed a class-action lawsuit alleging that reality TV star Kim Kardashian, NBA legend Paul Pierce, boxing champion Floyd Mayweather Jr. and other defendants fraudulently promoted […]

The post Celebrities Kim Kardashian, Paul Pierce, Floyd Mayweather and Others Ask Court To Drop New EthereumMax Lawsuit appeared first on The Daily Hodl.

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Celebs who got burned endorsing crypto and those that got away with it

Screen actors and sports stars copped most of the backlash for 2022’s crypto endorsements, while soccer legends appear to have gotten away with it.

Celebrities had a shaky year promoting crypto firms and projects throughout 2022. 

Many found themselves named in lawsuits over their alleged promotion of since-failed projects, while others have been relentlessly mocked on social media for their involvement in the first place.

From movie stars to television actors, sports stars to musicians, many celebrities may be regretting their endorsement deals last year, though that’s not to say that there haven’t been exceptions.

Who got burned?

In February last year, American comedian Larry David, who co-created the television series Seinfeld, appeared in a Super Bowl commercial for now-defunct crypto exchange FTX that encouraged users not to “miss out on the next big thing.”

David has since been named in a class-action lawsuit that alleges that he, along with other celebrities, had promoted FTX to unsophisticated investors without performing any due diligence on the exchange.

He’s also being investigated by the Texas State Securities Board regard payments received by FTX for his endorsements, among other celebrities.

Meanwhile, the movie star known for his role in the “Bourne Identity” film series, Matt Damon, has continued to be mocked for his part in the $100 million promotional campaign for Crypto.com.

Damon was even satirized by the animated series South Park in the season 25 premiere in February 2022.

In the sporting world, Japanese tennis player Naomi Osaka signed on to be an ambassador for FTX on March 21.

Like Seinfield’s co-creator, Osaka is also named in a lawsuit along with other high-profile celebrities who endorsed FTX including basketball legends Shaquille O’Neal and Stephen Curry, and NFL quarterback Tom Brady.

Professional boxer Floyd Mayweather was also named in a crypto promotion lawsuit in 2022 over his alleged promotion of EthereumMax, though the lawsuit was eventually dismissed by a federal judge in December.

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In the world of music, American rapper and hip hop artist Snoop Dogg has been named in a class action lawsuit for allegedly promoting Bored Ape Yacht Club nonfungible tokens (NFTs), along with other musicians including Madonna, Justin Bieber, Post Malone and DJ Khaled.

The lawsuit names over 40 people and companies as defendants, also including Tennis professional Serena Williams, actress Gwyneth Paltrow and comedians Jimmy Fallon and Kevin Hart.

Who got away with it

Interestingly, not all celebrity endorsements of crypto firms have been viewed in a negative light, nor have they attracted the scrutiny of class-action lawyers.

On Jun. 30, 2022, Binance announced it had snapped up the popular TikTok personality, Khaby Lame, as an ambassador.

The deal was seen as positive for the crypto sector, as Lame’s ambassador deal is part of Binance’s mission to increase Web3 awareness and adoption around the world.

Musician DJ Steve Aoki jumped into the NFT world with fantasy sports and sports betting operator DraftKings announcing the hitmaker as the brand ambassador for its NFT market.

Related: Tom Brady and other celebrities named in class-action lawsuit against FTX

American rapper Eminem performed alongside Snoop Dogg during the VMA’s to perform their NFT track "From The D 2 The LCD" featuring Otherside and Bored Ape NFTs.

In the sporting world, David Beckham became the global ambassador for blockchain company DigitalBits, launching his own range of NFTs in the process.

He appears to have avoided any accusations of wrongdoing despite the founders of DigitalBits being accused in an investor lawsuit for “diverting money needed for development” to expensive sports deals and luxury travel, according to a January 2022 report from The New York Times.

Meanwhile, legendary soccer player Lionel Messi has done deals with Singapore-based Bitget, fantasy sports platform Sorare and digital fan token company Socios.com.

Cristiano Ronaldo's foray into crypto sponsorship also appears to have gone down well in the community, working with Binance for the launch of an exclusive NFT collection allowing collectors the chance to receive perks including a personal message from Ronaldo and signed merchandise.

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EthereumMax Lawsuit Against Kim Kardashian, Floyd Mayweather and Others Thrown Out

EthereumMax Lawsuit Against Kim Kardashian, Floyd Mayweather and Others Thrown Out

A class action lawsuit that alleges numerous celebrities fraudulently promoted an Ethereum (ETH)-based decentralized finance (DeFi) altcoin to investors is being thrown out. According to new court documents, a judge has tossed the lawsuit saying that the plaintiffs’ allegations are insufficient to state a claim for relief. Celebrities named in the lawsuit include reality TV […]

The post EthereumMax Lawsuit Against Kim Kardashian, Floyd Mayweather and Others Thrown Out appeared first on The Daily Hodl.

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Class action against Kim K, Mayweather over EMAX dismissed… for now

Despite dismissing the case, the judge acknowledged the lawsuit reflects a potentially dangerous trend of fraudulent-like promotional schemes.

A federal judge in California has dismissed a class action lawsuit against reality TV star Kim Kardashian, boxing champ Floyd Mayweather and the founders of EthereumMax, explaining that the submissions failed to meet the “heightened pleading standards” for fraud claims.

The judge has, however, left room for the plaintiffs to refile the proposed class action lawsuit if certain provisions are amended.

In the original Jan. 7 court filing submitted by Scott+Scott Attorneys At Law, the plaintiffs argued that Kardashian, Mayweather, and also former NBA superstar Paul Pierce didn’t disclose they were being paid to promote EthereumMax (EMAX).

The plaintiffs alleged that they promoted it with the objective to “artificially inflate the price of the token” through the use of “false or misleading statements.”

Kim Kardashian promoted EMAX in a Jun. 2021 post on Instagram, while Floyd Mayweather wore the EMAX logo on his boxing trunks in a boxing match against YouTube star Logan Paul in the same month.

According to reports,  Judge Michael Fitzgerald dismissed the lawsuit on Dec. 7 on the grounds that the fraud allegations lacked merit and that investors at the end of the day also have the responsibility to conduct due diligence on their investments.

“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.”

However in his dismissal, Judge Fitzgerald acknowledged the power that celebrities have been afforded by new technologies and social media platforms in establishing potentially fraudulent promotional schemes.

“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,” Fitzgerald reportedly wrote in his dismissal.

Celebrities now have the ability to “readily persuade millions of undiscerning followers to buy snake oil with unprecedented ease and reach,” he added.

Related: SafeMoon pump-and-dump lawsuit targets Jake Paul, Soulja Boy and others

But despite Judge Fitzgerald’s dismissal, the investor’s fight may not be over. Fitzgerald reportedly stated that he’d allow the plaintiffs to refile the lawsuit if the investor’s legal team amended a few provisions from its original filing, with the Judge making reference to the reciting of a provision under the Racketeer Influenced and Corrupt Organizations Act (RICO).

Kardashian has already been bitten once before over her promotion of EthereumMax on her social media account. 

On Oct. 3, Kardashian reached a $1.26 million settlement with the U.S. Securities Exchange Commission (SEC) after allegedly failing to disclose her $250,000 paid promotion by the EthereumMax.

Mayweather's legal team has long denied any affiliation with the EthereumMax, with his Attorneys stating that the investor’s filing did not “identify a single statement made by Mayweather about eMax tokens or EthereumMax.”

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Taking down crypto influencers is one step that would help to heal the market

The EU moved in the right direction by passing a law requiring influencers to disclose the risks associated with crypto. More countries should follow their lead.

However, the crypto space is notoriously fickle, and the collapse of once-established companies such as Celsius and FTX are stark examples of how people can lose billions of dollars in crypto assets almost overnight.

For this reason, celebrity influencers should be thoroughly educated on a crypto product before promoting it. With so much at stake, this is a point that shouldn’t be overlooked by anyone in the industry.

Because of these huge risks, regulators are now asking questions regarding the ethics of celebrities using their considerable pull to draw people into crypto. And they’re not stopping at that; more jurisdictions are imposing stringent conditions for celebrities to pawn crypto products to the masses.

For example, in the European Union, a new set of regulations known as MiCA laws will require crypto influencers to fully disclose the financial risks associated with the products they’re advertising.

Singapore is instituting even more stringent measures. The city-state will only allow crypto companies to advertise their products on their own platforms while completely barring influencers from promoting any crypto asset on social media.

What about tech entrepreneurs boosting crypto on social media?

While restricting or banning celebrities and social media influencers from pushing crypto might be commendable, another question remains unanswered. What should be done about billionaire entrepreneurs whose words have the power to influence the trajectory of crypto?

Twitter’s new owner, Elon Musk, is a known crypto proponent and a big Dogecoin (DOGE) fan. As an example of his massive influence in the crypto space, on Tuesday, April 25, just hours after his intention to buy Twitter became public, the memecoin’s price jumped by nearly 23% to $0.1677. That price was the highest it had been since January 14, when it traded at $0.2032.

Related: It’s time for crypto fans to stop supporting cults of personality

And that wasn’t the only time: Several of Musk’s DOGE-related posts and comments from the past year also caused the cryptocurrency’s price to either rise or fall, depending on the sentiment Musk was sharing.

Binance CEO Changpeng Zhao, better known as CZ, is another influential voice in crypto. A casual tweet from him announcing his company was creating an industry recovery fund to help ameliorate the adverse effects of FTX’s collapse caused a surge in the price of Bitcoin (BTC) and the broader crypto market. While CZ didn’t specify the projects that the fund would be propping, or when it would become active, the news still caused BTC prices to shoot to almost $17,000.

We must consider the power of such individuals as far as influencing what we buy or sell is concerned. Regulators cannot treat the likes of Musk and CZ like ordinary people. Their words hold too much weight, especially for an industry as volatile as crypto.

Some have suggested that a Twitter spat between CZ and former FTX CEO Sam Bankman-Fried could have been the spark that caused the fire that burned FTX to the ground. These people cannot use their words so frivolously, especially not on social media.

And, while CZ has since refuted the claims that he shorted the FTX token, can we trust this to be true? After all, Binance stood to gain the most from FTX’s collapse as it now becomes the biggest crypto exchange in the world.

This might come off as controversial, but there might be a case for the likes of Musk and CZ to have their activities regulated too. After all, their voices have a significant influence in the crypto space. A whimsical social media post from someone in their rarified position can create significant upheaval in the crypto market.

Sadly, such regulation might feel like an infringement on their freedoms. Therefore, the best solution, in my opinion, would be for them to exercise greater caution in their utterances. With great power comes great responsibility, and people like them should lead by example by watching what they say. It would be unfortunate if it takes regulation to make them do so.

Benefits and drawbacks of celebrity crypto promotions

We’ve seen how Kim Kardashian and Floyd Mayweather faced legal action for unlawfully promoting crypto tokens. New Yorker Ryan Huegerich sued Mayweather, accusing the boxer of misleading investors while promoting the EMax token. The Securities and Exchange Commission, meanwhile, levied a fine on Kardashian.

The biggest problem with using celebrities to advertise crypto? While they usually command huge and eager followings, their audiences, more often than not, have little, if any, knowledge of crypto. Additionally, celebrities often have no idea about the risks associated with the products they’re promoting.

Of course, the upside of celebrity influencers endorsing crypto is the inevitable buzz they create and the vast network of influence they command. Kardashian, for example, has more than 250 million followers on Instagram. Additionally, these followers are usually hard-wired to trust the opinions of celebrities, however uneducated they might sound.

Related: The SEC is bullying Kim Kardashian, and it could chill the influencer economy

But, celebrities are also prisoners of the court of public opinion. Any PR gaffe on their part could easily crash and burn a crypto project.

And did I mention how expensive celebrities can be? Reports indicate that a promotional post on Kim Kardashian’s Instagram page will set you back anywhere between $300,000 and $1 million.

Regulations will undoubtedly help to protect us against lousy crypto decisions, but our best defense is a clear eye and lots of research. Nothing beats digging up as much information as possible about a project before putting your money into it.

Crypto winter has wrought untold havoc on investments, and it’s been exacerbated by the careless actions of some major players in the industry. The fall of companies such as FTX, Voyager, 3AC, Terra, Celsius and BlockFi only strengthen calls for the regulation of crypto.

Amid the drama, the role of celebrity endorsers should not be overlooked. As an industry, we need to find ways to ethically leverage celebrities’ popularity to promote our products.

In addition to working with the laws being put in place, I think it would be best if crypto projects thoroughly educated potential celebrity advertisers on the benefits and risks of their products. This way, influencers will be better placed to give a truer picture of what they’re selling rather than just settling for a big paycheck. I believe a little honesty will go a long way in repairing crypto’s tattered reputation.

Anastasia Kor is the chief marketing officer and a board member of crypto firm Choise.com. Before joining the company, she received degrees in economics and management from Gubkin State University of Oil and Gas, in addition to a master’s degree in marketing. She previously worked as a marketing manager for CINDX Platform.

The author, who disclosed their identity to Cointelegraph, used a pseudonym for this article. This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Famous people often have a tremendous influence on the attitudes we adopt and the decisions we make. For this reason, the crypto industry has increasingly leveraged such individuals to promote their products.

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19 celebrities called out by consumer watchdog group for shilling NFTs

Consumer watchdog group Truth in Advertising says celebrities promoting non-fungible tokens (NFTs) on their social media channels is an area "rife with deception."

Consumer watchdog group Truth in Advertising (TINA.org) has called out 19 celebrities for allegedly promoting non-fungible tokens (NFTs) without disclosing their connection to the projects. 

The not-for-profit consumer advocacy organization said on their website they investigated "celebrities who promote non-fungible tokens (NFTs) on their social media channels", finding that "it is an area rife with deception."

Among the star-studded list are sports stars Floyd Mayweather and Tom Brady, music icons Eminem and Snoop Dog, and several actresses, including Gwyneth Paltrow, all of whom have been sent letters urging them to immediately disclose any material connections they have to NFT companies or brands they have promoted, stating: 

"The promoter often fails to disclose material connection to the endorsed NFT company."

NFTs are digital certificates stored on the blockchain proving ownership of a digital or physical asset, often an artwork, with many high-profile projects often attracting celebrity endorsement and promotion. 

While no real legal penalty has been attached, TINA.org noted that it sent letters to the celebrities involved on Aug. 8 outlining their grievances and advising them of the potentially harmful effect shilling NFTs can have on the public.

One of the group's primary concerns outlined in the letters is that the possible financial risks associated with investing in such speculative digital assets are not being disclosed.

TINA.org previously sent letters to Justin Bieber and Reese Witherspoon's legal teams on June 10 for promoting NFTs on their social media accounts without disclosing their connection to the projects.

Bieber's legal team responded on July 1, denying any wrongdoing but stating the posts would be updated.

While Witherspoon's legal team contacted TINA.org on July 20, claiming the actress is not receiving any material benefits from promoting NFTs.

Shilling could violate FTC guidelines

In a blog post on their website, TINA.org wrote that the previously mentioned celebrities could be violating the Federal Trade Commission (FTC) rules regarding the Use of Endorsements and Testimonials in Advertising and the requirements for influencers.

The advocacy group links to the FTC website which outlines that influencers must disclose any material connections to brands they are endorsing, and make the disclosures clear, unambiguous, conspicuous, and within the endorsement.

So far, there has not been a publicized case of celebrities facing legal penalties for shilling NFTs or crypto.

Though there are several ongoing class action suits, most famously against Elon Musk for his endorsement of Dogecoin, and Mark Cuban for promoting Voyager crypto products.

A handful of other celebrities like Matt Damon caused a significant stir when he appeared in an ad promoting crypto products, which saw the actor relentlessly mocked and ridiculed for his involvement. 

Don't listen to celebs: SEC

In 2017, the U.S. Securities and Exchange Commission (SEC) warned investors about celebrity-backed initial coin offerings in a post on their website.

"Investors should note that celebrity endorsements may appear unbiased, but instead may be part of a paid promotion."

Related: Snoop Dogg may be the face of Web3 and NFTs, but what does that mean for the industry?

"Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws."

According to the SEC, celebrities and influencers using social media to encourage their followers to purchase stocks or other investments could be unlawful if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly.

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