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When popular crypto exchange FTX plunged into bankruptcy last week, taking with it all of its celebrity promoters, the crypto bubble started to implode.
Prior to its demise, FTX had a reputation for using prominent Hollywood and sports celebrities to sell its goods.
Among those named in a class-action lawsuit against the exchange, which lost $32 billion in the crash, are Larry David, Tom Brady, Giselle Bündchen, Shaquille O'Neal, Stephen Curry, and others. The lawsuit alleges that the exchange and its well-known spokespeople used misleading tactics to persuade investors to invest in the business. In addition to naming rights to a Miami sports stadium, it also owned a Formula One race team.
On November 15, Oklahoma resident Edwin Garrison, who invested a yield-bearing account from FTX, filed a complaint in a Florida federal district court, claiming to speak for "thousands, if not millions," of allegedly misled consumers nationwide. The lawsuit further asserts that under federal and Florida law, FTX's yield-bearing accounts constitute unregistered securities, continuing the prosecution of financial crimes.
But let's get back to the whole celebrity saga. According to the lawsuit, FTX and its former CEO Sam Bankman-Fried are accused of leveraging celebrities to entice "unsophisticated investors" in a purported "Ponzi scheme" to keep the business afloat.
Some of the biggest names in sports and entertainment, like these Defendants, were used as part of the FTX Entities' plan to generate money and persuade American investors to participate in FTX's yield-bearing accounts. The lawsuit asks for financial compensation on the grounds that the FTX collapse cost consumers more than $11 billion in losses.
The House Financial Services Committee stated that it would hold a hearing on FTX in December as part of the lawmakers' intentions to look into the failure of FTX.