NEW YORK (AP) — A host of Hollywood and sports celebrities, including Larry David and Tom Brady, have been named as defendants in a class action lawsuit against cryptocurrency exchange FTX, arguing that their celebrity status makes them guilty of promoting the company’s failing business model.
FTX has been in the public eye for more than a week, after the third-largest cryptocurrency exchange found itself with billions of dollars in losses and had to file for 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’ funds in businesses without their approval.
Lawmakers also announced their intention to investigate FTX’s failure, with the House Financial Services Committee saying it plans to hold a hearing on FTX in December.
Prior to its failure, FTX was known for using high profile Hollywood and sports celebrities to promote its products. It had the naming rights to a Formula 1 racing team as well as a sports arena in Miami.
Its ads featured “Seinfeld” creator David, as well as Tampa Bay Buccaneers star quarterback Brady, basketball players Shaquille O’Neal and Stephen Curry, and tennis star Naomi Osaka.
The lawsuit filed Tuesday night alleges these sports and TV celebrities brought instant credibility to FTX and should be found just 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 – like these defendants – to raise money and entice American consumers to invest … pouring billions into the deceptive FTX platform to keep the whole plan afloat,” the lawsuit said.
Class-action lawyer Adam Moskowitz pointed to previous instances where the US government fined celebrities Kim Kardashian and Floyd Mayweather for promoting crypto.
“The crypto industry needed celebrity endorsements to gain any credibility,” Moskowitz said.
The plaintiff in the case is Pierce Robertson, who is also involved in a case involving Voyager Digital, another bankrupt cryptocurrency company that was endorsed by Dallas Mavericks owner Mark Cuban.
Voyager Digital failed to protect itself from bankruptcy this summer, but FTX had agreed to buy Voyager’s assets for $1.4 billion, which would have led to financial relief for Voyager depositors. FTX’s failure now calls its aid to Voyager into question.
The lawsuit was filed in the Southern District of Florida. Moskowitz is the attorney representing the victims of the Florida residential tower collapse in Surfside, Florida.
Well-known attorney David Boies, who represented the US government against Microsoft in the 1990s and Al Gore in the 2000 election, is also named as counsel in the case.
The Miami Heat kicked off a four-game road trip to Toronto on Wednesday. Striker Udonis Haslem, also named in the lawsuit, is absent from the squad for personal reasons.
Fatima Hussein in Washington and Tim Reynolds in Miami contributed to this report.