EthereumMax investors secure partial win in class-action lawsuit

Investors who were parties to a 2022 lawsuit may be closer to pursuing legal action against celebrities who promoted the EthereumMax (EMAX) token after a recent decision by a California judge.

In a Wednesday filing in the US District Court for the Central District of California, Judge Michael Fitzgerald granted a motion allowing class-action lawsuits filed in four US states to move forward, but denied the request for a nationwide class against EMAX promoters. The order will allow cases involving investors who purchased EMAX between May 2021 and June 2021 to continue in New York, California, Florida and New Jersey.

“Plaintiffs have demonstrated that the proposed state classes comport with the requirements of Federal Rules of Civil Procedure,” the Wednesday filing reads. “However, the risk of inappropriate extraterritorial application of California and Florida law is simply too high with regard to the proposed Nationwide Class, as is the risk of individuated questions not amenable to common proof at trial.”

Source: CourtlistenerThe decision will allow state-level civil action against celebrity Kim Kardashian, boxer Floyd Mayweather and former NBA star Paul Pierce, all of whom promoted the token, as well as individuals and entities involved in its creation, including EMAX Holdings, EMAX co-founder Giovanni Perone and alleged EMAX “consultant, recruiter, and spokesman” Jona Rechnitz. Kardashian promoted the token on her Instagram story, potentially reaching up to 200 million people, in 2021.

Related: SEC, Ripple lawsuit to end after joint agreement to drop appeals

Throwback to 2021, and what led to the EMAX lawsuit

EthereumMax, whose white paper describes it as a “culture token,” rose to the attention of many in the crypto industry in 2021 after endorsements by some A-list celebrities, including Kardashian. Many alleged the project was a “pump and dump” scheme after the price surged more than 116,000% in a week, then fell more than 99%, leaving many investors holding the bag.

Though Fitzgerald initially dismissed the class-action lawsuit in December 2022, stating at the time that the token’s buyers were expected to exercise due diligence before investing, he left the door open for them to refile. They did about seven months later, in the same district, to be overseen by the same judge

Separately, Kardashian reached a $1.2 million settlement with the US Securities and Exchange Commission in October 2022 for failing to disclose a $250,000 payment to promote EMAX

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