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Friday, Jul 26, 2024

FTX celebrity promoters say crypto investors cannot sue over accounts

FTX celebrity promoters say crypto investors cannot sue over accounts

Celebrities who promoted FTX, including NFL quarterback Tom Brady and comedian Larry David, said an investor lawsuit seeking damages in the wake of the cryptocurrency exchange's collapse should be dismissed.

The proposed class action in Miami alleges that FTX yield-bearing accounts were unregistered securities that were unlawfully sold in the United States, which required the promoters to disclose the compensation they received.

The lawsuit seeks damages from FTX founder Sam Bankman-Fried alongside several celebrities who promoted FTX including David, the creator of TV shows "Seinfeld" and "Curb Your Enthusiasm." It also seeks damages from a National Basketball Association team that promoted FTX, the Golden State Warriors.

The celebrities and the Warriors said in court papers filed on Friday that they had never pitched the accounts at issue in the case and did not cause the investors' losses.

They said that under the investors' theory, "actors in any brokerage ad would be liable for selling any security that an individual user later purchased using the brokerage's services."

"That's nonsense," the celebrities said.

A lawyer for the investors did not immediately reply to a request for comment.

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."

Bankman-Fried argued in court papers that the case against him should be paused while he fights criminal charges in New York. The investors did not oppose the request, he said.

Prosecutors have charged Bankman-Fried, 31, with stealing billions of dollars in FTX customer funds to plug losses at Alameda Research, and making tens of millions of dollars in illegal political donations to buy influence in Washington, D.C. He has pleaded not guilty.

The case is Garrison v. Bankman-Fried et al., No. 22-23753, U.S. District Court, Southern District Of Florida.

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