Investors are not only suing Sam Bankman-Fried, but also famous backers of his bankrupt crypto company FTX, including Tom Brady, ex-wife Gisele Bündchen and comedy legend Larry David.
Founder of collapsing $32 billion ($47 billion) cryptocurrency exchange faces criminal investigation in Bahamas and possible trip to US for questioning over missing billions of dollars in customer funds.
Attorneys, including star litigator David Boies, filed the lawsuit on behalf of Edwin Garrison, an Oklahoma resident who had an FTX performance account that he funded with crypto assets to earn interest, and others like him, reports The New York Post.
The list of celebrity backers, which includes baseball star David Ortiz, NBA star Steph Curry and basketball icon Shaquille O’Neal, are accused of engaging in deceptive practices to sell digital currency accounts with FTX returns, the suit claims.
Celebrity sponsors participated in a Super Bowl commercial for FTX.
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“Part of the scheme employed by the FTX entities involved using some of the biggest names in sports and entertainment…pouring billions of dollars into the deceptive FTX platform to keep the entire scheme afloat” , the lawsuit states.
Other big names listed as defendants in the lawsuit include “Shark Tank” investor Kevin O’Leary, Jacksonville Jaguars quarterback Trevor Lawrence, tennis player Naomi Osaka and Miami Heat star Udonis Haslem.
Bankman-Fried, whose net worth was estimated at $17 billion at one point, is now broke — a shocking fall from grace for someone who was once hailed as a genius in the cryptocurrency
When the crypto exchange faltered due to liquidity problems, US investors suffered $11 billion in damages, according to the suit.
The proposed class action filed Tuesday afternoon in Miami alleges that the FTX yield accounts were unregistered securities that were illegally sold in the US.
FTX had signed a number of sports-related deals, some of which are collapsing. The NBA’s Miami Heat and Miami-Dade County decided Friday to end their relationship with FTX and will rename the team’s arena.
Earlier on Friday, Mercedes said it would immediately remove the FTX logos from its Formula 1 cars.
FTX was “ultimately a Ponzi scheme, deceiving customers and potential customers into the false impression that any cryptocurrency assets held on the Deceptive FTX platform were safe and not invested in unregistered securities,” claims the lawsuit.
Brady and Bündchen, who also appeared in commercials promoting FTX, bought stakes in the company, which was forced to file for bankruptcy protection last week after it emerged that customer deposits ‘they were using to make risky bets through a subsidiary research company.
Meanwhile, Bankman-Fried could be in hot water with federal investigators. Sources familiar with the matter told Bloomberg News that U.S. and Bahamian authorities have been discussing the possibility of extraditing Bankman-Fried, 30, whose company is based in the Bahamas, to the U.S. united
Bankman-Fried is said to be cooperating with Bahamian investigators. He is likely to return to the United States for questioning, although it is premature to discuss any possible criminal charges, according to Bloomberg.
After FTX filed for bankruptcy, Bankman-Fried took to Twitter to say he was “surprised to see things unfold the way they did.”
Customers fled the exchange over fears over whether FTX had enough capital and agreed to sell to rival crypto exchange Binance. But the deal fell through while Binance’s due diligence on FTX’s balance sheet was still pending.
FTX had valued its assets between $10 billion and $50 billion and listed more than 130 affiliated companies worldwide, according to its bankruptcy filing.
— This story originally appeared in nypost.com and republished with permission