High-Profile Athletes and Hollywood Celebrities Named as Defendants in $11B FTX Class Action Lawsuit

[1]

On November 15, a consortium of investors filed a class-action lawsuit in the Southern District of Florida against the founder of FTX, Sam Bankman-Fried, along with several high-profile athletes and Hollywood celebrities, including seven-time Super Bowl champion Tom Brady, NBA superstar Stephen Curry, NBA legend Shaquille O’Neal, tennis star Naomi Osaka, and “Seinfeld” creator Larry David.[2]

Each of the high-profile Hollywood and sports celebrities included in the lawsuit have appeared in commercials promoting FTX – the third-largest cryptocurrency exchange in the world.[3] Curry joined Brady at FTX as a shareholder and ambassador in September 2021 as his first cryptocurrency venture.[4] Curry shared in a press statement at the time: “I’m excited to partner with a company that demystifies the crypto space and eliminates the intimidation factor for first-time users. FTX is like-minded when it comes to giving back to the community in meaningful ways and I can’t wait to see what we can achieve together.”[5] Meanwhile, Osaka became an ambassador in March 2022 to help bring more women into Web3 – an idea for a new iteration of the World Wide Web, which incorporates concepts such as decentralization, blockchain technologies, and token-based economics.[6]

Last week, Bankman-Fried resigned as CEO and FTX filed for bankruptcy protection after reporting billions of dollars in losses.[7] News of FTX’s bankruptcy proceeding quickly led to the demise of several of the company’s sports-related deals.[8] The Miami Heat and Miami-Dade County ended its 19-year, $135 million naming rights deal secured in March 2021.[9] FTX had paid Miami-Dade County $20 million to date, and its contract with the Heat and the County requires FTX to pay $16.5 million if it faces an “insolvency event.”[10] Additionally, the Mercedes-AMG Petronas Formula 1 team suspended its deal with FTX, and esports organization TSM — the most valuable esports company in 2022 with a valuation of $540 million — also decided to suspend its 10-year, $210 million naming rights deal with FTX.[11]

The lawsuit claims that the defendants “made numerous misrepresentations” about FTX, and that the defendants’ endorsements of FTX were part of a “fraudulent scheme designed to take advantage of unsophisticated investors from across the country, who utilize mobile apps to make their investments.”[12] The lawsuit alleges that the athletes’ and celebrities’ statuses brought instant credibility to FTX and should be held just as culpable as Bankman-Fried for promoting FTX’s failed business model.[13] “Part of the scheme employed by the FTX Entities involved utilizing some of the biggest names in sports and entertainment – like these Defendants – to raise funds and drive American consumers to invest … pouring billions of dollars into the deceptive FTX platform to keep the whole scheme afloat,” said the lawsuit.[14] As a result, the lawsuit claims US consumers collectively sustained more than $11 billion in damages.[15]

[1] Photograph: https://help.ftx.com/hc/en-us/articles/360036096791-Media-Kit

[2] https://www.espn.com/nfl/story/_/id/35041152/tom-brady-celebrities-named-ftx-lawsuit

[3] Id.

[4] https://finance.yahoo.com/finance/news/stephen-curry-shaquille-oneal-more-152047335.html

[5] Id.

[6] Id.

[7] https://www.espn.com/nfl/story/_/id/35041152/tom-brady-celebrities-named-ftx-lawsuit

[8] https://frontofficesports.com/brady-curry-ftx-founder-named-in-11b-class-action-suit/

[9] Id.

[10] Id.

[11] Id.

[12] https://finance.yahoo.com/finance/news/stephen-curry-shaquille-oneal-more-152047335.html