FTX founder Sam Bankman-Fried and a string of A-list celebrities who backed his failed crypto trading platform have been sued in a class action lawsuit worth $11 billion.
The suit filed in Florida names stars including Tom Brady, his ex-wife Gisele Bundchen, Shaqille O’Neal, Steph Curry and Larry David. It claims Bankman-Fried, 30, and the celebrities he recruited to endorse FTX are behind losses to American consumers valued at $11 billion.
Many of the stars were ‘ambassadors’ for the trading platform, while others appeared in prime-time commercials.
The suit, filed by class action attorney Adam Moskowitz, alleges they are collectively ‘responsible for the many billions of dollars in damages they caused Plaintiff’.
It was filed as Bankman-Fried continued a desperate attempt to salvage his reputation on Wednesday by admitting: ‘We got overconfident and careless.’
He posted several tweets attempting to explain how FTX crashed and even talked up the firm’s extensive media coverage earlier this year, writing: ‘I was on the cover of every magazine, and FTX was the darling of Silicon Valley.’
Bankman-Fried is already subject to several investigations over the firm’s collapse.
Authorities in America and the Bahamas, where FTX was based and Bankman-Fried is currently holed up, are discussing the possibility of extraditing him to the United States for questioning.
The scandal has triggered a crisis of confidence in cryptocurrency as a whole and caused the value of assets including Bitcoin to plunge.
Bundchen looked glamorous on stage with Sam Bankman-Fried at the Crypto Bahamas event. The FTX chief looked awkward as he opted for his usual outfit of scruffy shorts and t-shirt
The lawsuit followed a series of dramatic developments in the FTX case:
The list of names in the new filing includes: ‘Sam Bankman-Fried, Tom Brady, Gisele Bundchen, Stephen Curry, Golden State Warriors, Shaquille O’Neal, Udonis Haslem, David Ortiz, William Trevor Lawrence, Shohei Ohtani, Naomi Osaka, Lawrence Gene David, and Kevin O’Leary.’
They are described in the 41-page as ‘parties who either controlled, promoted, assisted in, and actively participated in’ FTX’s operations, allegedly in breach of Florida law.
The suit adds: ‘The Deceptive and failed FTX Platform was based upon false representations and deceptive conduct.
‘Although many incriminating FTX emails and texts have already been destroyed, we located them and they evidence how FTX’s fraudulent scheme was designed to take advantage of unsophisticated investors from across the country, who utilize mobile apps to make their investments.
Tom Brady and now ex-wife Gisele Bundchen appeared in an FTX commercial last year. They’re named in a class action lawsuit which alleges the firm’s collapse has cost consumers $11 billion
Brady was filmed at home calling around his friends to sign them up with FTX. The company marketed the ad campaign with the slogan: ‘Tom Brady is in. Are you?’
‘As a result, American consumers collectively sustained over $11 billion dollars in damages.’
NFL star Brady and Bundchen, his supermodel ex-wife, are named as FTX ambassadors who ‘joined the company’s $20-million ad campaign in 2021’ and starred in a commercial ‘showing them telling acquaintances to join the FTX platform’.
Basketballer Curry is singled out for appearing in an ad campaign in which he said he didn’t need to be an expert in crypto because ‘with FTX I have everything I need to buy, sell, and trade crypto safely’.
David appeared in a Super Bowl commercial for FTX which showed him portraying a series of clueless characters as they reject bright ideas through history, including the toilet and the lightbulb.
The ad then showed David reject FTX, before a message appears: ‘Don’t be like Larry.’
Larry David starred in a multimillion dollar Super Bowl ad in which he rejected cryptocurrency before viewers were told: ‘Don’t be like Larry.’
David portrays a number of characters who reject inventions and ideas including the lightbulb, the toilet and space travel. He then rejects FTX – before viewers are told: ‘Don’t be like Larry.’
Steph Curry’s advert showed him telling viewers: ‘I’m not an expert and I don’t need to be, with FTX I have everything I need to buy, sell, and trade crypto safely.’
Shaq donned an FTX-branded sweater as he said: ‘Hey it’s Shaquille O’Neal and I’m excited to be partnering with FTX to help make crypto accessible to everyone. I’m all in, are you?’
Tennis star Naomi Osaka said in her commercial: ‘I’m proud to partner with FTX. Making cryptocurrency accessible is a goal that FTX and I striving towards.’
Shaquille O’Neal also appeared in an FTX commercial, as did Steph Curry. Osaka was an ‘ambassador’ for the company.
The lawsuit states: ‘The Deceptive FTX Platform maintained by the FTX Entities was truly a house of cards, a Ponzi scheme where the FTX Entities shuffled customer funds between their opaque affiliated entities, using new investor funds obtained through investments in the YBAs [yield-bearing accounts] and loans to pay interest to the old ones and to attempt to maintain the appearance of liquidity.
‘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 in the [yield-bearing accounts], which were offered and sold largely from the FTX Entities’ domestic base of operations here in Miami, Florida, pouring billions of dollars into the Deceptive FTX Platform to keep the whole scheme afloat.’
The suit was filed in the US District Court’s Southern District of Florida as Bankman-Fried continued his desperate attempts to save his empire.
In a series of tweets on Wednesday, he moaned that FTX ‘got overconfident and careless’, writing: ‘I was on the cover of every magazine, and FTX was the darling of Silicon Valley.’
The thread also said: ‘A few weeks ago, FTX was handling ~$10b/day of volume and billions of transfers.
‘But there was too much leverage–more than I realized. A run on the bank and market crash exhausted liquidity.
‘So what can I try to do? Raise liquidity, make customers whole, and restart.
‘Maybe I’ll fail. Maybe I won’t get anything more for customers than what’s already there.
‘I’ve certainly failed before. You all know that now, all too well.
‘But all I can do is to try. I’ve failed enough for the month.
‘And part of me thinks I might get somewhere.’
Bankman-Fried suggested media coverage of FTX made the firm ‘overconfident and careless’
Bundchen (right) on stage with Bankman-Fried in her tole as FTX’s environmental advisor
The rapid rise and swift downfall of crypto exchange FTX
Cryptocurrency exchange FTX has collapsed.
Here is a history of FTX since its foundation in 2019:
May – Former Wall Street trader Sam Bankman-Fried and ex-Google employee Gary Wang founded FTX, the owner and operator of FTX.COM cryptocurrency exchange.
August – FTX acquired mobile portfolio tracking application, Blockfolio for $150 million.
July – A $900 million funding round valued FTX at $18 billion.
September – FTX signed a sponsorship deal with Mercedes’ Formula 1 team.
October – FTX raised capital at a valuation of $25 billion from investors including Singapore’s Temasek and Tiger Global.
Jan. 27 – FTX’s U.S. arm said it was valued at $8 billion after raising $400 million in its first funding round from investors including SoftBank and Temasek.
Jan. 31 – FTX raised $400 million from investors including SoftBank at a valuation of $32 billion.
Feb. 13 – Larry David stars in Super Bowl commercial for FTX
April 26 – April 29 – Bankman-Fried is joined by celebrities including Tom Brady, Katy Perry, Tony Blair and Bill Clinton and the Crypto Bahamas conference.
June 4 – FTX signed a reportedly $135 million sponsorship deal for naming rights of the Miami Heat’s home court.
July 1 – FTX signed a deal with an option to buy embattled crypto lender BlockFi for up to $240 million.
July 22 – FTX offered a partial bailout of bankrupt crypto lender Voyager Digital. Voyager called it a ‘low-ball bid’.
July 29 – FTX said it won full approval to operate its exchange and clearing house in Dubai.
Aug. 19 – A U.S. bank regulator ordered crypto exchange FTX to halt ‘false and misleading’ claims it had made about whether funds at the company are insured by the government.
Sept. 9 – FTX’s venture capital fund said it would buy a 30% stake in SkyBridge Capital.
Nov. 2 – Crypto news website CoinDesk reported a leaked balance sheet that showed Alameda Research, Bankman-Fried’s crypto trading firm, was heavily dependent on FTX’s native token, FTT.
Nov. 6 – Binance CEO Changpeng Zhao said his firm would liquidate its holdings of FTT due to unspecified ‘recent revelations’.
Nov. 7 – Bankman-Fried said ‘FTX is fine. Assets are fine’.
Nov. 8 – FTT collapses by 72% as clients swamp the exchange with withdrawal requests. Binance offers a potential bailout in a non-binding deal.
Nov. 9 – Binance backs out of the rescue plan, saying: ‘As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.’
Nov. 11 – Bankman-Fried resigns as CEO and FTX files for Chapter 11 bankruptcy
Nov. 13 Police in the Bahamas announce a team from its Financial Crimes Investigation Branch are investigating whether any criminal misconduct occurred.
Nov. 15 – Bankman-Fried continues to plead with investors for money to cover the firm’s losses and tweets that he’s ‘meeting in-person with regulators and working with the teams to do what we can for customers’