What happened?
A federal judge in California has allowed class action lawsuits against the promoters of the EthereumMax token to proceed at the state level in New York, California, Florida, and New Jersey. The lawsuits target celebrities like Kim Kardashian and Floyd Mayweather who promoted the token during its rapid rise and subsequent crash. However, the judge rejected a broader nationwide claim, considering it too risky and complex to apply.
Who does this affect?
This decision affects investors who purchased EthereumMax tokens between May and June 2021, when the token’s value surged by over 116,000% before crashing by 99%. It also impacts the celebrities and individuals involved in promoting and creating the token, including Kim Kardashian, Floyd Mayweather, and Paul Pierce. Retail investors who suffered losses due to the token’s collapse may join the class action suits seeking restitution.
Why does this matter?
The class action suits highlight the potential market impact of celebrity endorsements on volatile assets like cryptocurrencies, and could set a precedent for future liability in similar cases. If successful, these lawsuits might deter high-profile personalities from endorsing speculative financial products without disclosing their compensation and potential risks. They may also influence how cryptocurrencies are marketed and regulated, potentially leading to more stringent oversight on promotional practices.