The stunning collapse of FTX, one of the leading cryptocurrency exchanges on the planet, has now landed in a federal court, in a proposed class-action lawsuit filed in the Southern District of Florida against Sam Bankman-Fried and FTX.
And the lawsuit implicates a number of sports figures, including Tom Brady, Steph Curry, Trevor Lawrence, Shaquille O’Neal, and the Golden State Warriors as defendants.
Attorney Adam Moskowitz, who along with attorneys David Boies and Stephen Neal Zack filed the class action on behalf of an Oklahoma resident, alleges in a 41-page complaint that FTX was a “house of cards,” seeking to target “unsophisticated investors” using celebrity endorsers such as Curry, Brady, O’Neal, and others.
The complaint was filed on behalf of Oklahoma resident Edwin Garrison, who is seeking to be the named plaintiff and represent the “thousands, if not millions, of consumers nationwide” who were influenced to invest in yield-bearing FTX crypto accounts. In the complaint, it is alleged that those accounts constitute unregistered securities, in violation of both Federal laws, as well as local Florida laws.
Four counts are alleged in the complaint: Violations of the Florida Securities and Investor Protection Act; Violations of the Florida Deceptive and Unfair Trade Practices Act; Civil conspiracy; and a request for Declaratory Judgment against the Defendants.
The complaint outlines the entire FTX “house of cards” as follows:
The Deceptive FTX Platform maintained by the FTX Entities was truly a house of cards, a Ponzi scheme where the FTX Entities shuffled customer funds between their opaque affiliated entities, using new investor funds obtained through investments in the YBAs [yield-bearing accounts] and loans to pay interest to the old ones and to attempt to maintain the appearance of liquidity.
Part of the scheme employed by the FTX Entities involved utilizing some of the biggest names in sports and entertainment—like these Defendants—to raise funds and drive American consumers to invest in the YBAs, which were offered and sold largely from the FTX Entities’ domestic base of operations here in Miami, Florida, pouring billions of dollars into the Deceptive FTX Platform to keep the whole scheme afloat.
What role did Brady and the other defendants play in this story? According to the complaint:
Part of the scheme employed by the FTX Entities involved utilizing some of the biggest names in sports and entertainment—like these Defendants—to raise funds and drive American consumers to invest in the YBAs, which were offered and sold largely from the FTX Entities’ domestic base of operations here in Miami, Florida, pouring billions of dollars into the Deceptive FTX Platform to keep the whole scheme afloat.
Beyond Bankman-Fried and FTX, these individuals or teams were named as Defendants, who according to the complaint helped by “funneling investors into the FTX Ponzi scheme, and to promote and substantially assist in the sale of the YBAs:”
- Tom Brady and Gisele Bundchen;
- Kevin O’Leary, also known as “Mr. Wonderful;”
- Udonis Haslem;
- David Ortiz;
- Steph Curry;
- Golden State Warriors;
- Shaquille O’Neal;
- Trevor Lawrence;
- Shohei Ohtani;
- Naomi Osaka; and,
- Larry David
In the complaint, advertisements on behalf of those defendants are highlighted, including the fact that the Warriors entered into an agreement with FTX to name the platform their “Official Crypto Platform and NFT Marketplace.” This included placing the FTX logo on the court at the Chase Center.
With respect to Brady and Bundchen, the complaint highlights their television add, described as part of FTX’s “$20-million ad campaign.” In the commercial, they were viewed telling acquaintances to join the platform.
Regarding Curry, the complaint highlights his “nationwide ad campaign pushing the Deceptive FTX Platform, known as the ‘#notanexpert’ campaign.” Furthermore, the complaint outlines how Curry’s ad campaign for FTX ended in his statement that “I’m not an expert, and I don’t need to be. With FTX I have everything I need to buy, sell, and trade crypto safely.” (Emphasis in original).
Osaka’s involvement with FTX is outlined as well, including the fact that Osaka wore the FTX logo at a number of tournaments, including the 2022 Miami Open. The complaint points out an FTX ad that featured her “competing in a comic strip,” and ended with this statement from her: “I’m Naomi Osaka and I’m proud to partner with FTX. Making cryptocurrency accessible is a goal that FTX and I are striving towards.”
With respect to all these defendants, it is alleged that these individuals or teams became brand ambassadors for the company, “driving retail consumer adoption of the Deceptive FTX Platform.” Furthermore, it is alleged that “Defendants’ misrepresentations and omissions made and broadcast around the country through the television and internet render them liable to Plaintiff and class members for soliciting their purchases of the unregistered YBAs.”
The proposed class action suit seeks an unspecified amount of damages, including “actual, direct and compensatory damages” as well as “restitution and disgorgement of revenues if warranted.”