Sam Bankman-Fried, former CEO of bankrupt crypto exchange FTX, has not had a good couple of weeks.
The crypto maven known as SBF has seen his company go bankrupt and his net worth drop by billions of dollars, and now he’s been named in a class-action lawsuit over the collapse of FTX.
The lawsuit names Bankman-Fried along with a number of other high-profile equity holders in FTX including Tom Brady, Steph Curry and Kevin O’Leary, and was filed on behalf of Oklahoma resident Edwin Garrison in the U.S. District Court for the Southern District of Florida. The lawsuit seeks $11 billion in damages.
The suit states that the celebrities and Bankman-Fried are “responsible for the many billions of dollars in damages they caused Plaintiff and the Classes” and aims to “force Defendants to make them whole.”
See also: Why do people invest in crypto? ‘It’s partly fraud and partly delusion,’ says Charlie Munger.
“The Deceptive and failed FTX Platform was based upon false representations and deceptive conduct,” the 41-page lawsuit reads. “Although many incriminating FTX emails and texts have already been destroyed, we located them and they evidence how FTX’s fraudulent scheme was designed to take advantage of unsophisticated investors from across the country, who utilize mobile apps to make their investments.”
Brady and Curry were made ambassadors for FTX in 2021 and received equity in the company. Both athletes also appeared in several commercials for the crypto exchange. It’s unclear what will happen to the money investors put into FTX, but any equity could be wiped out by the bankruptcy filing.
Representatives for Curry, Brady and FTX did not respond to MarketWatch’s request for comment on this story.
“There’s celebrity CEOs in this space as well as celebrity crypto entrepreneurs,” Gary Gensler, chair of the Securities and Exchange Commission, said on CNBC last week after news broke of FTX’s liquidity issues but prior to the bankruptcy announcement. “The public can fall prey to their promotions, their marketing and the like.”
FTX paused withdrawals last week amid a multibillion-dollar liquidity crunch. At one point, rival crypto exchange Binance was interested in a takeover of FTX but decided against the move, calling FTX’s financial problems “beyond our control or ability to help.”
Some FTX users were able to extract their funds from the exchange before its bankruptcy, but many others were not, as Marketwatch’s Frances Yue reports.
On Wednesday, the House Financial Services Committee announced plans to conduct a hearing on the collapse of FTX and said it “expects” to hear from Bankman-Fried.
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Source: finance.yahoo.com