Judge Dismisses Most Claims Against Celebrity Endorsers of FTX
In a significant legal development, a U.S. District Judge has mostly dismissed claims against high-profile celebrities tied to the collapsed cryptocurrency exchange FTX. The ruling, delivered by Judge K. Michael Moore, revealed that investors suing stars like Tom Brady, Naomi Osaka, and Larry David have not demonstrated that these public figures were knowledgeable of FTX’s fraudulent activities.
The lawsuit also implicated sports icons such as Stephen Curry and entertainers like Kevin O’Leary, who collectively endorsed FTX before its dramatic downfall. Judge Moore emphasized that while the endorsers’ actions might reflect negligence, they did not indicate intent to defraud investors. He stated, “While this behavior demonstrates that defendants were uninformed, negligent, or even reckless, it does not demonstrate that defendants had any knowledge of FTX’s fraud.”
However, the lawsuit involving allegations of celebrities promoting unregistered securities remains active, allowing plaintiffs the option to amend their claims and potentially renew their case against the endorsers.
FTX gained substantial traction in the cryptocurrency world with high-profile endorsements and partnerships with various sports teams. The company’s downfall was precipitated by its founder, Sam Bankman-Fried, engaging in reckless financial practices, including misusing customer funds to cover losses, leading to its bankruptcy in November 2022. Bankman-Fried is currently serving a 25-year prison sentence following his conviction on fraud-related charges.
As this complex legal saga unfolds, the ramifications for celebrity endorsers in the financial space continue to raise questions about accountability and transparency in influencer marketing.
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