FTX Trading Ltd. was a ubiquitous brand in 2021, with its presence marked from patches on Major League Baseball (MLB) uniforms to deals with global stars like NFL quarterback Tom Brady and MLB pitcher Shohei Ohtani. However, the fall of FTX in late 2022, culminating in the company’s insolvency and the indictment of its former CEO Sam Bankman-Fried for financial crimes, triggered a whirlwind of legal consequences.
Against this backdrop, a major lawsuit was filed on November 27 in a federal court in Miami. FTX creditors are seeking to recover about $11 billion in losses arising from FTX’s alleged mismanagement of funds. The target of the lawsuit, however, is not FTX itself, but a variety of entities and personalities that creditors allege contributed to the global fraud. In addition to FTX, defendants include MLB, Formula 1, the Mercedes-Benz racing team, basketball player Stephen Curry, former NBA star Shaquille O’Neal, quarterback Tom Brady, tennis player Naomi Osaka, among others.
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The plaintiffs argue that these groups and individuals endorsed FTX for quick advertising profits, influencing many to use FTX and, consequently, losing money. These endorsements appear as “active participation” in the FTX scandal, therefore claiming monetary compensation for those affected.
On the other hand, the defendants’ lawyers claim that their clients did not specifically instruct people to deposit money with FTX. This distances those involved from the mismanagement of client funds. Some defendants, including Lawrence, have already reached settlements, while others have filed countermotions to remove their names from the case.
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This case is not an isolated precedent; Investors have already sued celebrities for their roles in other crypto disasters, such as the EthereumMax case and Kim Kardashian. While the situation with EthereumMax involved the direct promotion of a specific cryptocurrency, the established legal precedent could have implications for the current case.
This court case highlights the complex interactions between celebrities, sports brands and the cryptocurrency sector. Thus, outlining a scenario where the lines between endorsement and legal responsibility become increasingly blurred.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.