Investors tied to a 2022 lawsuit got a green light on Wednesday, 6th August, to press state class actions against celebrities who pushed the EthereumMax token.
The US District Court for the Central District of California let cases in New York, California, Florida and New Jersey move forward for people who bought EMAX between May 2021 and June 2021.
Judge Michael Fitzgerald denied a request for a nationwide class. Plaintiffs said celebrities and others hyped the token and caused losses. The judge said state classes meet the rules, but a nationwide group posed legal and proof problems.
What does the ruling mean?
The order clears the way for separate suits in four states. It does not create a single, coast-to-coast class. That limits how widely shared claims and evidence can be applied.
The judge noted a risk of applying California and Florida law beyond state lines. He also flagged the problem of case details that need individual proof. Plaintiffs can now seek damages and trials in those state courts.
Who is named in the suits?
The cases target a mix of public figures and people tied to the token. Kim Kardashian, Floyd Mayweather and Paul Pierce are among those named.
The complaints also list EMAX Holdings, co-founder Giovanni Perone, and a man identified as a consultant, recruiter, and spokesman, Jona Rechnitz.
Kardashian promoted the token on her Instagram story in 2021. That post could have reached up to 200 million people, the filings say.
The token and the market shock
EthereumMax was called a culture token in its white paper. It drew wide attention after celebrity endorsements in 2021. The token’s price reportedly jumped about 116,000% in a week. It then fell by more than 99%.
Many investors said they were left with steep losses. Some observers called the run a pump and dump. Plaintiffs say the celebrity promotions helped fuel the rise and the sudden collapse.
Legal background
Judge Fitzgerald first dismissed the class-action claims in December 2022. At that time, he said buyers were expected to do their own research. But he left the door open for a refiling.
The investors filed again about seven months later in the same court, and the matter returned to him. The recent order shows the judge is willing to let limited, state-based claims proceed while brushing off a nationwide grouping.
Prior regulatory action
Kardashian settled with the US SEC in October 2022. She paid $1.2 million to resolve claims that she failed to disclose a $250,000 payment to promote EMAX. That settlement stood apart from the private lawsuits. It focused on disclosure rules rather than civil class claims.
State classes must be shortened so that members share common facts and legal issues. They must also show that those issues can be proven together at trial. The judge signalled that a nationwide class raised too many individual questions.
Plaintiffs will now work to build cases that fit the laws and standards of each state. That work will likely include witness statements, documents, and proof that the promotions caused buyers to lose money.
If plaintiffs win at trial or reach settlements, the results could pressure how influencers promote tokens. Big verdicts or deals could lead to more caution in paid promotions.