Court Rejects SEC Crypto Theory in Caitlyn Jenner Token Case: A Blow to Regulators?

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U.S. Court Deals Blow to SEC Crypto Theory in Caitlyn Jenner Token Case

Show AI Summary
The court’s ruling sets a precedent for future crypto cases, potentially limiting the SEC’s ability to regulate certain assets.
The dismissal with prejudice of federal securities claims against Caitlyn Jenner bars refiling in federal court, significantly impacting the case’s future trajectory.
The case’s remaining California state law claims may still proceed, leaving open the possibility of further litigation and potential consequences for the defendants.

On April 16, 2026, Judge Stanley Blumenfeld Jr. of the U.S. District Court for the Central District of California partially approved a request to dismiss the lawsuit *Naeem Azad et al. v. Caitlyn Jenner et al.* (Case No. 2:24-cv-09768). A final judgment was also issued that day, ending the federal case.

Coinbase’s Chief Legal Officer, Paul Grewal, highlighted a recent court decision on X (formerly Twitter), calling it a win against a key argument the SEC previously used in its cases against crypto companies. He pointed out the ruling received little attention despite being important. The court stated that simply promoting a crypto project isn’t enough to prove a ‘common enterprise’ unless investors’ funds are pooled or linked together, and this statement has quickly become a central point of discussion among legal experts in the crypto space this week.

What the Court decided

The legal decision depended on the “Howey Test,” a standard set by the Supreme Court in a 1946 case (SEC v. W.J. Howey Co.). This test determines if something is an “investment contract” by asking if money is invested in a shared business with the hope of making a profit through the work of others.

Judge Blumenfeld dismissed the lawsuit brought by lead plaintiff Lee Greenfield, finding that the plaintiffs hadn’t demonstrated a shared investment or agreement to share profits and losses – beyond just buying the digital token – which is required to proceed as a class action. Because of this, the court didn’t need to consider whether investors reasonably expected to profit from the efforts of the person behind the token, Jenner.

The federal court has permanently dismissed the securities claims against Greenfield, meaning he can’t bring those claims in federal court again. The judge also wouldn’t allow the plaintiff to revise their complaint a third time. However, claims of fraud and for work done without a formal contract, based on California law, were dismissed without preventing them from being filed in state court, as the federal court decided not to handle those specific claims.

The court’s order is available through the official docket on Justia and CourtListener.

Background of the case

In November 2024, the Rosen Law Firm filed a class action lawsuit representing people who bought the JENNER cryptocurrency. JENNER was first launched on the Solana blockchain on May 26, 2024, using the Pump.fun platform, and a version was later moved to the Ethereum blockchain. The value of the token briefly reached about $7.5 million in June 2024, but quickly fell to almost nothing.

The plaintiffs claimed that Jenner used her fame to advertise the cryptocurrency token on social media, including posts on X (formerly Twitter) showing AI-created images of her wearing a shirt promoting “JENNER ETH.” They argued that her widespread influence led people to believe they could profit from the token, which meets the legal requirements for it to be considered a security under the Howey Test.

The court had initially dismissed the case on May 9, 2025, because the plaintiffs—a group including many foreign investors—didn’t provide enough evidence of activity within the United States. The revised complaint now features Greenfield, a citizen of the U.K., as the main plaintiff, claiming over $40,000 in losses.

In an updated court document, the plaintiffs claimed investors combined their money because Kim Kardashian’s representative, Jenner, said a 3% fee from sales would be used to buy back tokens, fund marketing, donate to Donald Trump’s campaign, and offer partial ownership of her Olympic gold medal. However, Judge Blumenfeld dismissed the idea that this created a shared investment pool, pointing out the gold medal plan wasn’t announced until after one investor, Greenfield, had already made his purchases, and ultimately, the plan was never implemented. The judge also determined that the proposed uses of the funds weren’t clearly connected to how investors would profit.

Throughout the lawsuit, Jenner’s lawyers argued the digital token wasn’t an investment, but rather a lighthearted cryptocurrency created for fun on the Ethereum blockchain. Sophia Hutchins, Jenner’s former business manager and a co-defendant in the case, passed away in July 2025 while the lawsuit was still ongoing. Jenner had previously dismissed the lawsuit as baseless and established a legal fund, expressing concern that a win for the plaintiffs could negatively impact the broader digital asset industry.

Why the ruling matters

This ruling reinforces the legal understanding that most meme coins are different from traditional, regulated investments. It supports the SEC’s earlier position – stated on February 27, 2025 – that typical meme coins aren’t offered or sold as securities. The SEC has also clarified that these coins are more like digital collectibles than investments.

Although Judge Blumenfeld’s decision isn’t legally required for the SEC or other courts to follow, it provides a helpful precedent for lawyers defending tokens promoted by celebrities. The ruling offers a specific example of how the ‘Howey Test’ can be used to argue against the idea that a shared business venture exists simply because a celebrity promoted the token and promised to share transaction fees. This decision could also affect ongoing lawsuits involving other tokens linked to celebrities and political figures.

This situation highlights the general uncertainty surrounding celebrity-backed memecoins, a common issue in the crypto world. The problems with the HAWK memecoin and its creator, Hailey Welch, brought up similar questions about whether these coins should be considered securities, and ongoing disagreements – like the Senate investigation into the SEC’s handling of crypto deals related to Trump – are still influencing how these assets will be regulated.

As of today, there have been no reports of an appeal. The federal case is now finished, but Greenfield still has the possibility of bringing his fraud and contract-related claims in a California state court.

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2026-04-21 09:25