- An NFL player and two Youtubers have opted to settle with investors who alleged that their FTX promotions misled them.
- The three high-profile individuals have entered an agreement for an undisclosed term.
- It is a wait-and-see situation whether other celebrities will follow suit even as the founder Sam Bankman-Fried’s trial begins next month.
Promoting a product or a service can sometimes land you in trouble especially if no prior due diligence is conducted. But again who may have thought that the most active crypto exchange firm, with a $32 billion valuation, having raised a $400m USD, was actually tethering on the edge of bankruptcy?
This was the story of Sam Bankman-Fried’s crypto empire FTX, which was declared bankrupt in November 2022. SBF, founder and former CEO is facing trial next month. A number of celebrities who endorsed and promoted FTX are also facing their own legal challenges.
According to a Sept. 16 Bloomberg report, the three celebrities have entered a proposed agreement for an undisclosed sum or terms.
The lawsuit reads;
“Though FTX paid Defendants handsomely to push its brand and encourage their followers to invest, Defendants did not disclose the nature and scope of their sponsorships and/or endorsement deals, payments and compensation, nor conduct adequate (if any) due diligence.”
Celebrities Affected
Other celebrities entangled in this legal quagmire include; Tom Brady, Gisele Bündchen, Kevin O’Leary, Shaquille O’Neal, Naomi Osaka and David Ortiz.
Of the celebrities mentioned in the lawsuit, National Football League (NFL) quarterback Trevor Lawrence and YouTube influencers Kevin Paffrath and Tom Nash have reportedly settled their lawsuits. The allegation was that they did not disclose to their audience that they were commercially engaged to promote the crypto firm.
Eight YouTubers were engaged by FTX to promote the now-defunct crypto firm including; Graham Stephan, Andrei Jikh, Jaspreet Singh, Brian Jung, Jeremy Lefebvre and Erika Kullberg have been sued for failing to disclose compensation.
They say when it rains, it pours. This lawsuit seems to be taking a number of celebrities and entities along the way, including Creators Agency, which was the talent management company behind the promotion of FTX and which is also facing the lawsuit.
And the music does not end there !, the new management at FTX is also thinking of ways in which they can reclaim millions of dollars paid to celebrity athletes and sports teams that promoted the crypto firm before it went bankrupt in November 2022.
High-profile people and entities Cashed in Big on FTX
The details of the filing reveal that business mogul Kevin O’Leary received the lion’s share with a fee of $2,348,338, followed by former NBA star Shaquille O’Neal who received approximately $750,000 and then Trevor Lawrence received $205,555.
Among the venture capital and private equity firms facing the class-action suits which are before a federal judge in Miami include Sequoia Capital and Thoma Bravo which invested in FTX. In September, FTX instituted a lawsuit against LayerZero Labs,
a cross-chain protocol firm seeking to recover a substantial amount of over $21 million allegedly illegitimately withdrawn just days before FTX declared bankruptcy in November 2022
A number of celebrities, sports figures, legal firms, banks and investment fund firms have been accused of enabling Bankman-Fried to pull off what is now being described by the prosecutors as the largest fraud in US history. Bankman-Fried will go to trial next month in Manhattan on criminal charges where he has pleaded not guilty.
Arguments posed by the lawyers of celebrities are that they were not involved in the running of the company and hence investors have no claim against them
