Investors are suing not only Sam Bankman-Fried, but also celebrity endorsers of his defunct cryptocurrency company FTX, such as Tom Brady, ex-wife Gisele Bundchen, and Larry David. Investors have also filed lawsuits against athletes like Shaquille O’Neal, Steph Curry, and David Ortiz.
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The lawsuit was filed on behalf of Edwin Garrison, an Oklahoma resident who had an FTX yield-bearing account that he funded with crypto assets to earn interest, and others like him, by attorneys including star litigator David Boies. According to the lawsuit, celebrities who promote FTX, like David, who appeared in a Super Bowl commercial for the company, are accused of using misleading tactics to promote accounts that earn a yield on digital currency.
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“Part of the scheme employed by the FTX Entities involved utilizing some of the biggest names in sports and entertainment … pouring billions of dollars into the Deceptive FTX Platform to keep the whole scheme afloat,” the lawsuit read.
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The lawsuit also names “Shark Tank” investor Kevin O’Leary, quarterback for the Jacksonville Jaguars Trevor Lawrence, tennis player Naomi Osaka, and Miami Heat player Udonis Haslem as defendants. Bankman-Fried, whose net worth was once estimated to be as high as $17 billion, is now penniless, a shocking decline for someone who was once widely hailed as a genius in the cryptocurrency industry.
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US investors suffered $11 billion in losses as a result of the cryptocurrency exchange’s failure due to liquidity issues, the lawsuit claims. The FTX yield-bearing accounts, according to the proposed class action lawsuit filed late on November 15 in Miami, were unregistered securities that were forcibly sold in the US.
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A number of the sports-related deals that FTX had entered into are now in trouble. The Miami Heat of the NBA and Miami-Dade County made the decision on November 11 to end their partnership with FTX and rename the team’s arena. Mercedes announced earlier on November 11 that it would immediately take the FTX logos off of its Formula One vehicles.
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The lawsuit claims that FTX was ultimately a Ponzi scheme that gave customers and potential customers the impression that any cryptocurrency assets held on the misleading FTX Platform were secure and were not invested in unregistered securities. Brady and Bundchen, who additionally starred in advertisements for FTX, purchased equity stakes in the business.
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Last week, the company was forced to file for bankruptcy after it was discovered that customer deposits were being used to place risky bets through a subsidiary research firm. Bankman-Fried may currently be in trouble with federal investigators. According to sources familiar with the situation, US and Bahamian authorities have been talking about extraditing the 30-year-old Bankman-Fried, whose company is based in the Bahamas, to the US.