- Sam Bankman-Fried has agreed to help FTX investors pursue legal claims against celebrity promoters of the failed crypto exchange •
- Bankman-Fried’s former colleagues Caroline Ellison, Gary Wang, and Nishad Singh have already settled with the investors.
- The investors are seeking to recover damages from high-profile figures who endorsed FTX, such as Tom Brady and Larry David.
Bankman-Fried’s one-time friends and co-defendants Caroline Ellison, Gary Wang, and Nishad Singh have already settled with the investors.
Background
Sam Bankman-Fried, the founder of the now-bankrupt cryptocurrency exchange FTX, has agreed to assist investors suing celebrities like Larry David and Tom Brady who promoted the exchange.
Bankman-Fried’s Cooperation
As part of a settlement deal with FTX investors, Bankman-Fried agreed to provide information and help investors recoup losses from celebrities who promoted FTX. This includes testifying under oath about payments celebrities received for endorsing FTX.
Bankman-Fried’s former associates Caroline Ellison, Gary Wang, and Nishad Singh have already reached individual settlements with investors. Ellison and Wang each agreed to pay $5 million while the amount Singh paid was not disclosed.
Celebrity Endorsements
FTX paid various celebrities to promote their exchange and cryptocurrencies. Prominent figures endorsing FTX included Larry David, Tom Brady, Stephen Curry, Shaquille O’Neal, and others.
It’s estimated FTX paid over $300 million on celebrity endorsements. Investors argue the promotions painted FTX as a legitimate and trustworthy platform even though it was failing financially.
FTX Collapse
FTX filed for bankruptcy in November 2022 amid allegations it mishandled customer funds. An estimated 1 million customers were impacted by FTX’s collapse.
Sam Bankman-Fried was arrested in December on charges of defrauding investors and misusing customer deposits. He pleaded not guilty but could face up to 115 years in prison if convicted.
Investor Lawsuits
Investors have filed multiple lawsuits seeking to recoup losses from FTX’s failure. The celebrity endorsement deals are a key focus as investors claim celebrities provided legitimacy to a fraudulent operation.
It’s expected Bankman-Fried’s cooperation will help investors build cases showing celebrities were aware of issues at FTX but still promoted the exchange.
