FTX’s Bankman-Fried, Celebrity Promoters Sued by Crypto Investors

By | November 16, 2022

U.S. crypto investors sued FTX founder Sam Bankman-Fried and several celebrities who promoted his exchange including comedian Larry David, alleging they engaged in deceptive practices to sell FTX yield-bearing digital currency accounts.

The proposed class action filed late Tuesday night in Miami alleges that FTX yield-bearing accounts were unregistered securities that were unlawfully sold in the U.S.

When the crypto exchange faltered on liquidity concerns, U.S. investors sustained $11 billion in damages, the lawsuit alleges.

Related: The Spectacular Fall of FTX: Considerations About Crypto Custody and Insurance

Attorneys including David Boies filed the lawsuit on behalf of Edwin Garrison, an Oklahoma resident who had an FTX yield-bearing account which he funded with crypto assets to earn interest, and others like him.

Garrison alleges that while FTX lured U.S. investors to its yield-bearing accounts, it was “Ponzi scheme” where investor funds were shuffled to related entities to maintain the appearance of liquidity.

The lawsuit seeks unspecified damages from Bankman-Fried and eleven athletes and celebrities who promoted FTX, including David, the creator of “Seinfeld” and “Curb Your Enthusiasm,” who starred in a commercial for FTX that aired during the 2022 Super Bowl.

The ad featured David playing fictional characters dismissing important innovations throughout history, and ended with the message “Don’t Miss Out on Crypto.”

Others named in the lawsuit included National Football League quarterback Tom Brady, tennis star Naomi Osaka and professional basketball team the Golden State Warriors.

Representatives for Bankman-Fried, Brady, Osaka and the Golden State Warriors did not immediately respond to requests for comment on Wednesday.

Reuters was not immediately able to reach a representative for David.

FTX filed for bankruptcy and is facing scrutiny from U.S. authorities amid reports that $10 billion in customer assets were shifted from FTX to Bankman-Fried’s trading company Alameda Research.

Reuters has reported that at least $1 billion in client funds are missing.

Topics Lawsuits

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