A class-action lawsuit against Kim Kardashian and Floyd Mayweather Jr. over alleged crypto fraud has collapsed after the plaintiffs withdrew their claims. The suit accused the celebrities of promoting EthereumMax, a minor cryptocurrency, in a so-called 'pump-and-dump' scheme that deceived investors.
EthereumMax has described the legal claim as a 'deceptive narrative'. The collapse of the lawsuit highlights the difficulty of prosecuting fraud in the crypto arena, where legal definitions remain unclear.
US federal regulators say 46,000 people have reported losing $1bn in crypto to scams since January 2021. The total value of crypto assets has dropped to less than $1tn from its November 2021 peak of $3tn.
Prosecuting digital fraud runs up against the unresolved question of whether cryptocurrencies are securities. The US Securities and Exchange Commission (SEC) has jurisdiction over securities, but the law is far from clear. Charles Elson, an authority on corporate governance, said: 'Crypto is a strange bird – is it a coin, is it buying a dollar, or the right to invest in a dollar?'
The question of whether celebrity pitch people could be held liable remains open. First, courts would have to decide if crypto is a security, and then if that security was promoted fraudulently.
