Bankman-Fried, Tom Brady and Other FTX Celebrity Promoters Sued by Crypto Investors

Bankman-Fried, Tom Brady and Other FTX Celebrity Promoters Sued by Crypto Investors

Nov 16 (Reuters) – U.S. crypto investors have sued FTX founder Sam Bankman-Fried and several celebrities who promoted his exchange, including NFL quarterback Tom Brady and comedian Larry David, claiming that they had engaged in deceptive practices to sell FTX yield digital currency accounts.

The proposed class action lawsuit filed Tuesday night in Miami alleges that the FTX yield carrier accounts were unregistered securities that were illegally sold in the United States.

FTX has filed for bankruptcy and is under intense scrutiny from US authorities amid reports that $10 billion in client assets were transferred from FTX to Bankman-Fried’s trading company, AlamedaResearch.

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

When the crypto exchange faltered due to liquidity issues, US investors suffered $11 billion in damages, according to the lawsuit.

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 rejecting important innovations throughout history and ended with the message “Don’t Miss Out on Crypto”.

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

Representatives for Bankman-Fried, Brady, Osaka, David and the Golden State Warriors did not immediately respond to requests for comment 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 filed on behalf of Edwin Garrison, an Oklahoma resident who had an FTX yield account which he funded with crypto assets to earn interest, and others like him.

Garrison alleges that if FTX attracted US investors to its yield accounts, it was a “Ponzi scheme” where investors’ funds were transferred to related entities to maintain the appearance of liquidity.

Investors and the United States Securities and Exchange Commission have already sued celebrities for deceptively touting cryptocurrencies.

Reality TV star Kim Kardashian agreed in February to pay the SEC $1.26 million to settle allegations that she failed to disclose she was paid to promote EthereumMax tokens. She did not admit any wrongdoing.

Private investors have also sued Kardashian and others for their role in promoting the tokens.

Garrison cited those cases in his lawsuit, along with a February ruling from the 11th U.S. Circuit Court of Appeals that allowed investors in the BitConnect cryptocurrency to sue people who made the promoting the coin online.

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

Sean Masson, an attorney at Scott + Scott representing crypto investors in the EMAX case, said investors have used Florida’s unfair trading law to target crypto promoters in ongoing lawsuits.

“To be successful, they’re going to have to establish a deceptive act or an unfair practice, and that it caused actual harm,” Masson said.

Reporting by Abinaya Vijayaraghavan in Bengaluru and Jody Godoy in New York; Editing by Noeleen Walder, Anna Driver and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

Jody Godoy

Thomson Reuters

Jody Godoy reports on banking and securities law. Contact her at

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