A lawsuit against celebrities who promote now-worthless crypto tokens is creating alarms among Hollywood figures as they realize they could be found liable if followers take their advice. 

A Los Angeles district judge, Michael Fitzgerald, refused Tuesday to dismiss a lawsuit accusing celebrity Kim Kardashian and two former professional athletes, boxer Floyd Mayweather and NBA player Paul Pierce, of promoting EthereumMax tokens in 2021. According to the ruling, there is proof that celebrities had influence over their followers when they endorsed the tokens. 

On December 7, the judge granted the request filed by celebrities to dismiss the lawsuit, claiming there was no proof the investors actually saw the ads promoted by the celebrities. Yet, the plaintiffs filed a 162-page amended complaint on December 22.

Mr. Fitzgerald said the new complaint alleged the defendants “were profiting off endorsements at their fans’ expense by touting an investment opportunity that had no legitimate business plan.” The social media posts targeted the “already-dedicated followers” of the celebrities, Mr. Fitzgerald said. Consequently, the followers were “particularly vulnerable” to the messages promoted by the figures.

The lawsuit, Ryan Huegerich, Individually and on behalf of all others similarly vs. Steve Gentile, Giovanni Perone, Justin French, Kimberly Kardashian, Floyd Mayweather, Jr., and Paul Pierce, was filed in January last year by lawyer John Jasnoch of Scott + Scott Attorneys at Law LLP, on behalf of a New York resident, Ryan Huegerich, who bought tokens between May 14 and June 27, 2021. 

The plaintiffs claim the celebrities were involved in a “pump and dump” scheme where they worked together to inflate the price of the token through false or misleading statements. The EMAX tokens are digital assets built using the Ethereum blockchain. They are known as “ERC20 tokens.” Once created, they can be traded, spent, or transacted with. 

Ms. Kardashian promoted the crypto token on her Instagram story in June 2021. “Are you guys into crypto?” Ms. Kardashian said, while also clarifying that she was not providing financial advice but passing along information that friends told her about the Ethereum Max token. “A few minutes ago, Ethereum Max burned 400 trillion tokens- literally 50% of their admin wallet giving back to the entire e-max community,” the post said. 

Ms. Kardashian, represented by Michael Rhodes, argued in her motion to dismiss that her posts were not false or misleading. She also claimed that the plaintiffs do not have proof they lost money because of them. Mr. Rhodes did not respond to The New York Sun’s request for comment. 

Ms. Kardashian had to pay $1.26 million last October to resolve charges filed by the Securities and Exchange Commission under the allegations that she promoted the crypto asset without disclosing the $250,000 payment she received.

Mr. Mayweather promoted EthereumMax on his boxing trunks last June during a widely viewed fight with a YouTube figure, Logan Paul. The fight had about 650,000 pay-per-view buys in America. Mr. Mayweather is represented by lawyer James Sanders, who did not respond to the Sun’s request for comment. 

In Mr. Mayweather’s motion to dismiss, Mr. Sanders says that the plaintiffs’ claims are based on speculations and that the boxer never explicitly endorsed the token. “Not once do Plaintiffs allege that Mayweather ever uttered the words ‘Ethereum Maxx’ or ‘EMAXX’,” the document says. 

Mr. Pierce promoted the token through his Twitter account on May 26, 2021, by posting a screenshot of his trading account with about $2 million profit from EMAX tokens that had increased more than 83 percent in one day. Later that day, Mr. Pierce shared another tweet, claiming he did not need ESPN anymore as he had Ethereum Max. “I made more money with this crypto in the past month than I did with y’all in a year,” the tweet said. The day before, ESPN had fired Mr. Pierce.

Mr. Pierce is represented by lawyer Joel Weiner, who declined to comment through a representative. In his dismissal motion, he argues that he never shared any false statements and that the tweets constrained “a bit of vague puffery.” “These statements are not actionable, and in any event no Plaintiff could reasonably have relied on a few tweets from a former basketball player to purchase cryptocurrency,” the document says. 

Mr. Pierce paid $1.4 million in February to resolve charges by the SEC that claim the NBA player promoted the tokens without disclosing the $244,000 payment he received. 

If desired, plaintiffs have until June 26 to file one last amended complaint. Defendants would have until July 17 to respond to an amended complaint.