A lawsuit accusing Kim Kardashian and Floyd Mayweather of deceiving investors by promoting a cryptocurrency on social media has been dismissed.
Investors who bought EthereumMax tokens said they lost money after believing what celebrities said about the digital asset.
The lawsuit was filed in January and alleged that the defendants conspired to inflate the value of the tokens.
District Judge Michael Fitzgerald of California said in his ruling Wednesday that the case raised “legitimate concerns” about the ability of celebrities to get fans to “purchase snake oil with unprecedented ease and reach.”
But the law still required investors to “act sensibly” before acting “in accordance with the zeitgeist of the moment,” he added.
Kardashian wrote an Instagram post in June 2021 saying, “Do you like cryptocurrencies??? This is not financial advice, but sharing what my friends have told me about the Ethereum Max token.”
Her post included “#ad” at the bottom, indicating she was being sponsored, but did not disclose her $250,000 payout from EthereumMax.
Mayweather promoted EMAX tokens at a boxing match and Bitcoin conference in June 2021.
The value of EMAX tokens skyrocketed in 2021, but by January they had lost 97% of their value.
In addition to Kardashian, Mayweather and former Boston Celtics star Paul Pierce, the defendants in the case included Steve Gentile and Giovanni Perone, the co-founders of EthereumMax, and Justin French, a consultant and developer of the cryptocurrency.
The judge’s ruling said: “This action demonstrates that anyone with the technical skills and/or connections can mint a new currency and create their own digital marketplace overnight.
“Similarly, the action underscores the power of social media in enabling celebrities to communicate directly with their millions of fans at the touch of a button.
“These two facts together have seemingly allowed highly volatile, unvetted investment ventures to go viral based solely on the paid word of celebrity promoters.
“Losses inevitably followed. The court acknowledges that this action raises legitimate concerns about the ability of celebrities to readily persuade millions of prying 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 sensibly before basing their bets on the current zeitgeist.”
Michael Rhodes, an attorney for Kardashian, told NBC, “We are pleased with the court’s well-reasoned decision in the case.”
Investors can file the lawsuit again if they change some of their claims by Dec. 22.
It comes two months after Kardashian agreed to pay $1.26m (£1m) and not promote the cryptocurrency for three years to settle US Securities and Exchange Commission claims over her non-disclosure of paying $ 250,000 he received.
