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Cryptocurrency investors burned by FTX’s spectacular failure are prepared to sue the exchange’s founder, Sam Bankman-Fried, and the celebrities who were involved in promoting him. In a class action lawsuit filed in Miami on Tuesday night, the plaintiffs targeted celebrities including Tom Brady, Larry David and Steph Curry, alleging that by charging FTX they were engaging in deceptive practices.
The lawsuit also claims that FTX was selling unregistered securities in the form of performance accounts. According to the lawsuit, the defendants committed “misrepresentations and omissions” designed to “induce confidence and encourage consumers to invest in what was ultimately a Ponzi scheme.”
the Washington Post has more:
The lawsuit, filed Tuesday in US District Court in Miami, alleges that FTX was designed “to take advantage of unsophisticated investors” by persuading them to use the company’s services to invest in cryptocurrency. None of the defendants appearing in the investment platform’s ads “did any due diligence before marketing these FTX products to the public,” the filing added.
Prominent attorney David Boies, who recently represented Theranos businesswoman Elizabeth Holmes in her fraud trial, brought the lawsuit on behalf of Edwin Garrison of Oklahoma, an interest-bearing FTX account owner.
The filing states that while the celebrities named as defendants disclosed that they were associated with FTX, they did not detail “the nature, extent, and amount of compensation they personally received in exchange for promoting FTX’s deceptive platform.”
The court documents note that the Securities and Exchange Commission (SEC) has said that “failure to disclose this information would be a violation of the anti-promotion provisions of the federal securities laws.”
The lawsuit did not ask for a specific dollar amount, but claimed that the defendants could be liable for “many billions of dollars in damages.”