NEW YORK (AP) — A host of Hollywood and sports celebrities, including Larry David and Tom Brady, were named as defendants in a class action lawsuit against cryptocurrency exchange FTX, arguing that their celebrity status made them guilty of promoting the company’s failed business model.
FTX has been in the spotlight for more than a week after the third-largest cryptocurrency exchange suffered billions of dollars in losses and had to seek bankruptcy protection on Friday. The Bahamas-based company and its founder, Sam Bankman-Fried, are being investigated by state and federal authorities for allegedly investing depositors in companies without their approval.
Lawmakers also announced plans to investigate the failure of FTX, with the House Financial Services Committee saying it plans to hold a hearing on FTX in December.
Before it failed, FTX was known for using high-profile Hollywood and sports celebrities to promote its products. It held the naming rights to a Formula 1 racing team and a sports arena in Miami. The commercials featured “Seinfeld” creator David, Brady, the star quarterback of the Tampa Bay Buccaneers, basketball players Shaquille O’Neal and Stephen Curry, and tennis star Naomi Osaka.
The lawsuit filed late Tuesday alleges that these sports and TV celebrities immediately brought credibility to FTX and should be as guilty as Bankman-Fried.
“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 American consumers to invest… pouring billions of dollars into the deceptive FTX platform to keep the entire plan afloat,” the lawsuit said.
Class action attorney Adam Moskowitz pointed to previous cases where the US government fined celebrities Kim Kardashian and Floyd Mayweather for promoting crypto.
“The crypto industry needed celebrities to gain some credibility,” Moskowitz said.
The plaintiff in the case is Pierce Robertson, who is also involved in a case involving Voyager Digital, another failed cryptocurrency company that was endorsed by Dallas Mavericks owner Mark Cuban. Voyager Digital was denied bankruptcy protection this summer, but FTX had pledged to buy Voyager’s assets for $1.4 billion, which would have brought financial relief to Voyager’s depositors. With the failure of FTX, aid to Voyager is now in doubt.
The lawsuit was filed in the Southern District of Florida. Moskowitz is the attorney representing the victims in the Florida residential tower collapse in Surfside, Florida.
Noted attorney David Boies, who represented the US government against Microsoft in the 1990s and Al Gore in the 2000 election, is also named as an attorney in the case.
The Miami Heat began a four-game road trip in Toronto on Wednesday. Striker Udonis Haslem, also named in the lawsuit, is not with the team for personal reasons.
Fatima Hussein in Washington and Tim Reynolds in Miami contributed.