Benzinga - If you were involved in crypto in 2022, you likely saw a handful of FTX Trading Ltd. branding and advertising. From patches on Major League Baseball (MLB) umpires to deals with global superstars such as NFL quarterback Tom Brady and pitcher Shohei Ohtani, FTX's logo was everywhere.
The marketing strategy was extremely successful in the beginning, and FTX rose to prominence. But everything came crashing down when FTX became insolvent in late 2022.
Once the dust settled, former CEO Sam Bankman-Fried was convicted on several counts, including money laundering and fraud. The company also had liabilities exceeding $9 billion. Though it has been able to pay off some of it, it still owes more than $5 billion. As the liquidation process is slow, many investors are getting impatient and are scared of losing their funds.
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In a lawsuit filed Nov. 27 in a federal court in Miami, FTX creditors are looking to recoup $11 billion in losses resulting from FTX's mismanagement of funds. But the lawsuit is not aimed at FTX. Instead, it is aimed at people and institutions viewed as "aiding and abetting and/or actively participating in the FTX Group's massive, multibillion-dollar global fraud."
Among those named in the lawsuit were MLB, Formula 1, the Mercedes-Benz racing team, basketball player Stephen Curry, former NBA star Shaquille O'Neal, Trevor Lawerence, quarterback Tom Brady, Japanese tennis player Naomi Osaka, pitcher Shohei Ohtani and others.
MLB and Formula 1 did not respond to a request for comment from Bloomberg, and Mercedes F1 declined to comment.
The plaintiffs argue that these groups and individuals began endorsing FTX as they could make some quick money from the advertising. Through their endorsements, many were convinced to begin using FTX and eventually lose money. They argue that these endorsements were classified as "active participation" in the FTX scandal, meaning that there should be monetary compensation for those involved.
Conversely, the defendants' lawyers argue that they did not specifically tell people to deposit money into FTX and are far removed from the mismanagement of customer funds.
Some celebrities, including Lawrence, have reached settlements. Others have filed counter motions to remove their names from the case.
This is not the first time investors have sued celebrities for their roles in a crypto mishap. Media personality Kim Kardashian was among those listed in a lawsuit involving EthereumMax, a pump-and-dump that occurred in late 2022. While the EthereumMax situation involved the direct solicitation of a specific cryptocurrency, the legal precedent could still be in play for this case.
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