Celebrities including NFL star Tom Brady and comedian Larry David have been named in a class-action lawsuit against cryptocurrency exchange FTX, accusing them of being responsible for promoting the failing company.
FTX, one of the largest cryptocurrency exchanges in the world, broke last week – A stunning reversal of fortune for a company once valued at $32 billion.
The Bahamas-based company and its founder, Sam Bankman-Fried, are under investigation by state and federal authorities for allegedly investing depositors’ money in venture capital investments without their approval.
Before its collapse, FTX was known for using high-profile personalities to promote its products.
It also owns the naming rights to the Formula 1 racing team as well as the Miami stadium.
Its ads feature “Seinfeld” creator David Brady, Tampa Bay Buccaneers star quarterback Brady, basketball players Shaquille O’Neal and Stephen Curry, and tennis star Naomi Osaka.
The lawsuit, filed late Tuesday, said the stars brought instant credibility to the platform and were therefore as guilty as Mr. Bankman-Fried.
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Celebrities keep ‘the plan’
This isn’t the first time celebrities have clashed with cryptocurrency promotion. in october, Kim Kardashian agrees to pay $1.26m (£1.12m) to settle the allegations over her Instagram posts.
The reality star did not disclose that she was paid $250,000 (£220,000) for promoting the cryptocurrency asset on her feed.
“Part of the scheme employed by the FTX entities involved using some of the biggest names in sports and entertainment — such as these defendants — to raise money and drive U.S. consumer investment … to pour billions of dollars into the deceitful FTX platform to sustain the entire The plan was afloat,” the lawsuit said.
Class action attorney Adam Moskowitz filed the suit in the Southern District of Florida.
Mr. Moskowitz is an attorney representing the victim Collapse of a residential building in the state.
“Very serious allegations”
The crisis has raised further questions about the regulation of cryptocurrencies and other digital assets.
The US House Financial Services Committee said it wanted to hear from Mr. Bankman-Fried, who now faces potential civil and criminal charges.
“The FTX debacle has done a huge disservice to over 1 million users, many of them ordinary folks who poured their hard-earned savings into the FTX cryptocurrency exchange only to watch it all disappear in seconds,” Commission Chair Maxine Waters said.
Singapore’s finance minister and deputy prime minister said the collapse of the FTX exchange has “very serious allegations that amount to potential fraud.”
Lawrence Wong said recent developments in the crypto market have reinforced the city-state’s stance that they are “on the right track” in focusing on innovation in digital assets, but have also taken a tough stance on crypto speculation and trading by retail investors.
Bitcoin and other cryptocurrencies hit hard When FTX was on the verge of bankruptcy.
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