Caption: Pasquinelli v. HUMBL, Inc., et al.
Case No.: 23-743-JLH
Jurisdiction: U.S. District Court for the District of Delaware
Judge: Hon. Jennifer L. Hall
Summary
On December 19, 2025, Judge Jennifer L. Hall granted motions to dismiss filed by HUMBL, Inc., certain individual defendants, and George Sharp. The Court dismissed all claims against the moving defendants in their entirety. The dismissal was with prejudice, and leave to amend was denied as futile.
Allegations Against HUMBL
Plaintiffs alleged that HUMBL and several executives violated Sections 10(b) and 20(a) of the Securities Exchange Act and Sections 5 and 12(a)(1) of the Securities Act. The complaint asserted that defendants made materially false and misleading statements and sold an unregistered security tied to HUMBL’s “BLOCK ETX” service. These allegations were set forth in the Second Amended Class Action Complaint, plaintiffs’ third attempt to plead viable claims.
Defendants’ Motion to Dismiss
The HUMBL defendants and George Sharp moved to dismiss for failure to state a claim. They argued that plaintiffs failed to plead reliance, a required element of Section 10(b), and therefore could not establish primary or control-person liability. They also contended that plaintiffs failed to plead that the BLOCK ETX service constituted a security under the Securities Act.
Plaintiffs’ Opposition
Plaintiffs argued they adequately pleaded reliance, both directly and through presumptions under the fraud-on-the-market doctrine and Affiliated Ute. They also asserted that BLOCK ETX should be treated as a security, comparing it to a mutual fund or common enterprise.
Court’s Ruling
The Court dismissed all Exchange Act claims under Sections 10(b) and 20(a) against the moving defendants. The Court also dismissed the Securities Act claims under Sections 5 and 12(a)(1) relating to the BLOCK ETX service. The HUMBL defendants and George Sharp were terminated from the action.
Court’s Rationale
Reliance: The Court held that plaintiffs again failed to plausibly plead reliance. Allegations of direct reliance were conclusory, and plaintiffs failed to establish entitlement to presumptions of reliance.
Fraud-on-the-Market: The Court found plaintiffs did not plausibly allege an efficient market, noting that seven of eight Cammer and Krogman factors weighed against them.
Affiliated Ute: The Court held plaintiffs failed to plead a duty to disclose and were not entitled to the omission-based presumption.
Section 20(a): Because no Section 10(b) claim was stated, control-person claims necessarily failed.
Securities Act Claims: The Court held plaintiffs failed to plausibly allege that BLOCK ETX was a security, emphasizing the absence of allegations showing a common enterprise or the purchase of shares in the service.
Leave to Amend: The Court concluded further amendment would be futile given plaintiffs’ repeated failure to cure deficiencies.
Case Status
All claims against the HUMBL defendants and George Sharp have been dismissed with prejudice. The HUMBL defendants and George Sharp are terminated from the case.
