Judge Blumenfeld Jr., presiding over the case in a California federal court, issued an order on Thursday, outlining his rationale for dismissing the amended complaint against Jenner and her late manager, Sophia Hutchins. The core of his decision hinged on the plaintiffs’ failure to plausibly demonstrate that the JENNER tokens met the criteria of an "investment contract," a key component in determining whether an asset is a security under the landmark Howey Test. This test, established by the Supreme Court in 1946, defines an investment contract as an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others. In this instance, Judge Blumenfeld Jr. found critical elements of the Howey Test to be absent.

Specifically, the judge noted that the lawsuit failed to establish that investor money was pooled in a manner typically associated with a common enterprise, nor was it used to develop "any related product or technology." This distinction is crucial; traditional securities often involve capital raised for business operations, product development, or tangible projects that are intended to generate returns for investors. In contrast, the JENNER token, as presented by the defense, was explicitly marketed "solely for entertainment purposes" on the Ethereum blockchain. Its value, according to the defendants, was anticipated to increase primarily due to Jenner’s extensive fame and influence, which she would leverage to promote the token, thereby theoretically boosting demand.

However, Judge Blumenfeld Jr. was unequivocal in his assessment of this promotional strategy. He stated in his order, "Promotion alone, however, does not establish a common enterprise absent pooling or a structure linking investor fortunes." This distinction is critical for the broader crypto market. It suggests that mere celebrity endorsement and the expectation of price appreciation through promotional activities, without an underlying business venture or shared financial commitment to a common productive effort, may not be enough to classify a token as a security. The court effectively drew a line between speculative asset promotion and genuine investment in an enterprise.

The legal battle commenced in November 2024, when a group of JENNER memecoin buyers initiated a class-action lawsuit against Caitlyn Jenner and Sophia Hutchins. The plaintiffs alleged significant financial losses, claiming to have lost thousands of dollars as the token’s price plummeted from its peak. Their initial complaint posited that JENNER was an unregistered securities offering, implying that it should have been registered with the Securities and Exchange Commission (SEC) and subject to the same regulatory oversight as traditional investment products. The initial complaint, however, lacked sufficient detail to persuade the court.

Judge Blumenfeld Jr. initially tossed the suit in May 2025, citing a "failure to state a claim." This legal term means that even if all the factual allegations in the complaint were true, they did not legally establish a basis for the relief sought by the plaintiffs. Undeterred, the group of buyers, led by Lee Greenfield, a UK citizen who claimed to have lost over $40,000 investing in JENNER, filed an amended complaint later that same month. This revised filing sought to address the deficiencies identified by the court and bolster their argument that the JENNER token indeed met the criteria of an investment contract.

The amended complaint introduced new allegations aimed at proving the existence of a "common enterprise" and "expectation of profits from the efforts of others." It argued that investors had pooled their assets based on Jenner’s alleged promises. Specifically, the plaintiffs claimed Jenner had promised that once the token achieved a market capitalization of $50 million, a 3% transaction fee would be implemented. This fee, they contended, would then be used to fund various initiatives, including token buybacks (which could theoretically increase the token’s value), marketing campaigns to further promote the token, donations to Donald Trump’s presidential campaign, and even the issuance of a token representing fractional ownership in Jenner’s Olympic gold medal. These new claims were an attempt to demonstrate a tangible plan for generating value for investors through collective efforts and managerial decisions.

However, Judge Blumenfeld Jr. remained unconvinced. He meticulously dissected the new arguments, particularly focusing on the planned donations to Donald Trump’s campaign. The judge noted that the amended complaint failed to adequately explain how investors believed that these political donations would provide a direct financial return to them. While such donations might align with a celebrity’s personal political leanings or public image, they do not inherently translate into an economic benefit for token holders in the way an investment in a commercial enterprise would. The connection between a political donation and an investment return was simply too tenuous to establish a common enterprise aimed at profit for investors.

Furthermore, the judge addressed the ambitious plan to distribute fractionalized ownership interests in Jenner’s Olympic gold medal. He pointed out a significant chronological flaw: this plan was not announced until August 2024, which was "after the last of his purchases" by lead plaintiff Lee Greenfield. More critically, the plan "was never executed." This meant that Greenfield, and presumably other plaintiffs who purchased tokens before this announcement, could not have based their investment decision on this specific promise. Moreover, an unexecuted plan holds little weight in demonstrating a past or ongoing investment contract. The judge’s scrutiny underscored the importance of concrete, active, and clearly communicated investment propositions at the time of purchase.

Given these continued shortcomings, Judge Blumenfeld Jr. denied the class group another opportunity to amend their lawsuit, effectively bringing the federal securities claims to a close. He also added that any remaining claims pertaining to contracts and common law fraud under California law were best suited for state court jurisdiction, indicating that while federal securities laws were not violated, other civil disputes might still exist under state statutes. This bifurcation of claims is a common legal practice, allowing specific legal avenues to be pursued in the appropriate judicial forum.

The JENNER token itself has a rather tumultuous history, reflecting the volatile and often unpredictable nature of the memecoin market. It was initially launched on the Solana blockchain in May 2024 through the memecoin creation platform Pump.fun. Almost immediately, the token became embroiled in controversy. Jenner, along with other celebrities who had launched memecoins around the same time, publicly claimed they had been scammed by Sahil Arora, an individual alleged to have collaborated on these token launches. This incident highlighted the lack of robust oversight and the potential for bad actors in the nascent memecoin space.

Following this initial controversy, Jenner relaunched her token on the Ethereum blockchain. This move, while perhaps intended to regain investor trust or establish a more stable platform, had adverse effects on early investors. Those who had purchased the original Solana-based token claimed that the relaunch on Ethereum significantly diminished the value of their holdings, creating further losses. Since its peak value of nearly $7.5 million in June 2024, the JENNER token has, like many other memecoins, essentially lost all of its value, serving as a stark reminder of the extreme risks associated with highly speculative digital assets.

This ruling by Judge Blumenfeld Jr. carries significant implications for the broader cryptocurrency landscape, particularly for the rapidly expanding category of celebrity-backed memecoins. It reinforces the idea that not all digital assets, even those promoted by high-profile figures with promises of future value, will automatically be classified as securities under US law. The judgment emphasizes that for a token to be deemed an "investment contract," there must be more than just promotional efforts and an expectation of profit. There needs to be a clear "common enterprise" where investors pool their money for a shared, productive venture managed by others, rather than merely speculating on a token’s price based on celebrity endorsement.

This decision could provide a degree of clarity for crypto projects and celebrities, suggesting that if a token is explicitly marketed for "entertainment purposes" and lacks features like pooled funds for development, or clear investment returns linked to managerial efforts, it might avoid security classification. However, it also underscores the SEC’s continued vigilance and the nuanced application of the Howey Test. Each token and its specific characteristics, marketing, and underlying economic realities will still be scrutinized on a case-by-case basis. For investors, the ruling serves as a powerful reminder of the inherent volatility and speculative risks associated with memecoins, urging extreme caution and due diligence, particularly when celebrity hype is the primary driver of perceived value rather than a tangible, productive enterprise. The legal and regulatory battle over the classification of digital assets is far from over, but this ruling offers a distinct chapter in its evolving narrative.