Judge Gives Kim Kardashian Apparent Victory in Crypto Lawsuit

Kim Kardashian, SEC, crypto fine, EthereumMax

A federal judge has granted reality star Kim Kardashian and boxer Floyd Mayweather an apparent victory in a lawsuit that accuses the celebrities of scamming cryptocurrency investors.

Kardashian and Mayweather were sued in January — along with former NBA star Paul Pierce — for allegedly making false and misleading statements while promoting EthereumMax.

As PYMNTS noted at the time, the suit — filed by an investor — claimed the cryptocurrency was a pump-and-dump scam and accused the celebrity defendants of “collaborating” with the executives to “misleadingly promote and sell the digital asset associated with EthereumMax.”

But in his ruling Monday (Nov. 7), U.S. District Judge Michael Fitzgerald said his “tentative” view is that attorneys for the investors are “trying to act” like the Securities and Exchange Commission (SEC) but “haven’t chosen to view the tokens as a security” and didn’t use a standard securities fraud claim in their suit, Bloomberg reported.

The judge added that the celebrities didn’t “care to label the tokens as a security for obvious reasons,” per the report. He is set to issue a final written order later.

Fitzgerald’s ruling came a little more than a month after Kardashian was fined $1.26 million by the SEC for failing to mention that she was paid $225,000 to endorse EthereumMax when she posted about it on Instagram last June, directing her 228 million followers to a link where they could buy the cryptocurrency.

“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” SEC Chair Gary Gensler said in October.

These cases are happening as countries around the globe are taking regulatory action to deal with a host of blockchain/crypto-related issues, PYMNTS noted earlier this week.

Read more: Lawmakers Struggle to Balance Risk Reward of Crypto Regulation

The White House, for example, has proposed legislation that would develop comprehensive standards for the cryptocurrency industry’s environmental issues. And the European Union has recently passed legislation that would permit cryptocurrency wallet providers to market themselves across the region so long as they adhere to certain anti-money laundering (AML) and stability requirements.

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