FTX, Star Backers Tom Brady and Steph Curry Sued by Investor (3)

FTX and former chief executive officer Sam Bankman-Fried were sued by an investor over claims that the cryptocurrency exchange now in crisis targeted “unsophisticated investors” using celebrity endorsers including Tom Brady and Stephen Curry, who are also named as defendants.

In a complaint filed Tuesday in federal court in Miami, Oklahoma resident Edwin Garrison is asking to represent a class of “thousands, if not millions, of consumers nationwide.” That includes all investors in the US who were enrolled in yield-bearing FTX crypto accounts, which he alleges constitute unregistered securities in violation of US and Florida laws.

Garrison claims FTX used celebrities, who along with Brady and Curry also included Gisele Bundchen and Shaquille O’Neal, to promote the exchange’s unregistered securities and funnel investors into a Ponzi scheme. Football star Brady and his then-wife Bundchen filmed a commercial called “FTX. You In?” that showed them encouraging acquaintances to join the platform, according to the complaint.

Lawyers for FTX didn’t immediately respond to emails seeking comment on the suit. Representatives of Brady and Bundchen didn’t immediately respond to emails.

Read More: Sam Bankman-Fried Facing Possible Trip to US for Questioning

“FTX’s fraudulent scheme was designed to take advantage of unsophisticated investors from across the country, who utilize mobile apps to make their investments,” Garrison said in the suit. “As a result, American consumers collectively sustained over $11 billion” in damages.

Garrison’s legal team said in the lawsuit that it had found “many incriminating FTX emails and texts” but didn’t say what was in them or what made them incriminating.

The suit, which seeks unspecified damages, is the first to be filed against Bankman-Fried and his companies since FTX’s bankruptcy court filing, as investors start jockeying to recover whatever losses they can. The bankruptcy filing for protection from creditors may limit Garrison and others in efforts to get their money back. FTX and its related companies may have more than a million creditors, according to court filings.

Celebrities have been sued in other cases claiming crypto losses. Kim Kardashian and Floyd Mayweather Jr. were named as defendants in a suit accusing them of scamming investors in a cryptocurrency called EthereumMax. The two celebrities won a tentative ruling last week to dismiss the suit.

Garrison is represented by the Boies Schiller Flexner law firm and by Adam Moskowitz, a Florida lawyer who last December filed a suit against crypto broker Voyager Digital Ltd., alleging it misled customers by charging hidden fees on transactions. Voyager opposed the claims. That case has been delayed by Voyager’s own bankruptcy court filing.

Meanwhile, the collapse of FTX has thrown a wrench into Voyager’s plan to sell its assets to the company for $1.4 billion.

The case is Garrison v. Bankman-Fried, 22-cv-23753, US District Court, Southern District of Florida (Miami).

(Updates with background on other crypto lawsuits.)

To contact the reporter on this story:
Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net

Peter Blumberg, Steve Stroth

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