Skip to main content

FTX's Sam Bankman-Fried, Other Celebrity Promoters Sued by Crypto Investors

US crypto investors sued FTX founder Sam Bankman-Fried and several celebrities who promoted his exchange including NFL quarterback Tom Brady and comedian Larry David, claiming they engaged in deceptive practices to sell FTX yield-bearing digital currency accounts.

The proposed class action filed on Tuesday night in Miami alleges that FTX yield-bearing accounts were unregistered securities that were unlawfully sold in the United States.

FTX filed for bankruptcy and is facing scrutiny from the US authorities amid reports that $10 billion (nearly Rs. 81,500 crore) in customer assets were shifted from FTX to Bankman-Fried's trading company Alameda Research.

At least $1 billion in client funds are missing, sources have told Reuters.

When the crypto exchange faltered on liquidity concerns, US investors sustained $11 billion (nearly Rs. 8,140 crore) in damages, the lawsuit says.

The lawsuit seeks damages from Bankman-Fried and 11 athletes and other celebrities who promoted FTX, including David, the creator of "Seinfeld" and "Curb Your Enthusiasm."

David starred in a commercial for FTX that aired during the 2022 Super Bowl in which he portrayed fictional characters dismissing important innovations throughout history and ended with the message "Don't Miss Out on Crypto."

Brady, tennis star Naomi Osaka and professional basketball team the Golden State Warriors are also defendants in the lawsuit.

Representatives for Bankman-Fried, Brady, Osaka, David and the Golden State Warriors did not immediately respond to requests for comment on Wednesday.

John J Ray III, FTX's new chief executive who is not named as a defendant in the lawsuit, declined to comment on the allegations.

The lawsuit was brought on behalf of Edwin Garrison, an Oklahoma resident who had an FTX yield-bearing account which he funded with crypto assets to earn interest, and others like him.

Garrison alleges that while FTX lured the US investors to its yield-bearing accounts, it was a "Ponzi scheme" where investor funds were shuffled to related entities to maintain the appearance of liquidity.

Investors and the the US Securities and Exchange Commission have previously gone after celebrities for deceptively touting cryptocurrencies.

Reality TV star Kim Kardashian agreed in February to pay the SEC $1.26 million (nearly Rs. 10 crore) to settle claims that she failed to disclose she was paid to promote EthereumMax tokens. She did not admit wrongdoing.

Private investors also have sued Kardashian and others over their roles in promoting the tokens.

Garrison cited these cases in his lawsuit, as well as a February ruling by the 11th US Circuit Court of Appeals that allowed BitConnect cryptocurrency investors to sue individuals who promoted the coin online.

His lawsuit alleges Bankman-Fried and FTX promoters engaged in a conspiracy to defraud investors and violated Florida state laws requiring securities to be registered and prohibiting unfair business practices.

Sean Masson, an attorney at Scott+Scott who represents crypto investors in the EMAX case, said investors have used the Florida unfair trade law to target crypto promoters in lawsuits that are pending.

"To be successful, they are going to need to establish a deceptive act or unfair practice, and that it caused actual damages," Masson said.

© Thomson Reuters 2022


Affiliate links may be automatically generated - see our ethics statement for details.

Adblock test (Why?)



from NDTV News- Special https://ift.tt/lypk8bR https://ift.tt/SONhxvd
via IFTTT

Comments

Popular posts from this blog

US Defense Chief Austin To Make 'Full Recovery' From Cancer: Doctors

Austin, a 70-year-old career soldier, initially underwent minor surgery to treat cancer on December 22. Washington: US Defense Secretary Lloyd Austin is likely to make a "full recovery" from prostate cancer and his prognosis is "excellent," two doctors said after he was seen at Walter Reed hospital for a follow-up appointment. Austin controversially kept US President Joe Biden in the dark about the cancer diagnosis for weeks, and did not inform either the commander-in-chief or Congress until days after he was hospitalized on January 1 for complications from his treatment. "Secretary Austin was seen today at Walter Reed National Military Medical Center for a scheduled post-prostatectomy surveillance appointment," the doctors said in a statement released by the Pentagon. "He continues to recover well and is expected to make a full recovery. Secretary Austin's prostate cancer was treated early and effectively, and his prognosis is excellent,...

North Korea Says It Tested New Strategic Cruise Missile

North Korea test-fired a new generation of strategic cruise missile on Wednesday. (Representational) Seoul: North Korea fired several cruise missiles towards the Yellow Sea on Wednesday, Seoul's military said, the latest in a series of tension-raising moves by the nuclear-armed state. Hours later, North Korea appeared to confirm the firing, saying it had carried out its first test of a new generation of strategic cruise missiles it is developing, the Pulhwasal-3-31. Pyongyang has accelerated weapons testing in the new year, including tests of what it called an "underwater nuclear weapon system" and a solid-fuelled hypersonic ballistic missile. "Our military detected several cruise missiles launched by North Korea towards the Yellow Sea at around 7:00 am today," the South Korean Joint Chiefs of Staff said in a statement. Unlike their ballistic counterparts, the testing of cruise missiles is not banned under current UN sanctions against Pyongyang. Cruise...

US "Deplores" Israeli Attack On UN Training Center In Gaza

More than 25,000 people have been killed in Gaza since war began against Hamas. Washington: The United States was concerned by an Israeli attack on a U.N. training center sheltering displaced people in Gaza's Khan Younis on Wednesday, Deputy State Department spokesperson Vedant Patel said, repeating Washington's calls for protection of civilians, humanitarian workers and aid facilities. "We deplore today's attack on the U.N.'s Khan Younis training center," Patel told a news briefing, calling it "incredibly concerning." The Director of UNRWA Affairs in Gaza said that nine Palestinians were killed and 75 were injured when two tank rounds hit the building that was sheltering around 800 people in the southern Gaza Strip. "Civilians must be protected, and the protected nature of UN facilities must be respected, and humanitarian workers must be protected so that they can continue providing civilians with the life-saving humanitarian assistance...