EthereumMax investors secure partial win in U.S. class-action case against celebrities

Investors in the EthereumMax (EMAX) token have achieved a partial victory in a class-action lawsuit targeting celebrities and entities linked to the project. U.S. District Court Judge Michael Fitzgerald granted a motion to allow lawsuits filed in California, New York, Florida, and New Jersey to proceed, but rejected a request for a nationwide class action. The decision pertains to investors who bought EMAX between May and June 2021, a period during which the token’s price surged over 116,000% before collapsing by more than 99%, leading to substantial losses for many.

The court found that plaintiffs met the requirements for class certification under the Federal Rules of Civil Procedure. However, Fitzgerald noted the legal risks of applying California and Florida law beyond their jurisdictions and the difficulty of proving common questions of fact for a national class. This means the case will remain limited to those four states for now, with other investors excluded from the current proceedings.

The lawsuit accuses the EMAX project of being part of a “pump and dump” scheme, where celebrities including Kim Kardashian, Floyd Mayweather, and Paul Pierce promoted the token to artificially inflate its price before exiting their positions. Kardashian, in particular, settled with the U.S. Securities and Exchange Commission (SEC) in October 2022 for $1.2 million over failure to disclose her payment for promoting EMAX. The plaintiffs argue that such actions misled investors into buying the token without proper disclosure or understanding of the risks involved.

The case also targets EMAX Holdings, co-founder Giovanni Perone, and alleged consultant Jona Rechnitz, all of whom are accused of playing key roles in the creation and promotion of the token. The lawsuit revisits the controversy surrounding EMAX’s 2021 launch, which was fueled by high-profile social media endorsements and an unusually rapid price surge.

Fitzgerald initially dismissed the lawsuit in December 2022, stating investors should exercise due diligence, but allowed the plaintiffs to refile. The new filing was accepted, and the court’s latest ruling indicates that the plaintiffs are making progress in their legal efforts. The outcome reflects broader judicial scrutiny of celebrity influence in cryptocurrency markets and the challenges of applying traditional securities law to digital assets.

Source:

[1] https://www.law360.com/securities

[2] https://cointelegraph.com/news/ethereummax-class-action-lawsuit-celebrities