The First FTX Lawsuit Has Arrived

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  • The first FTX lawsuit has appeared, targeting Bankman-Fried and a glut of celebrity promoters
  • The promoters, including Tom Brady and Larry David, are accused of promoting unregistered securities
  • The case doesn’t appear to have much merit, at least at first glance

The first of many lawsuits against FTX founder and former CEO Sam Bankman-Fried rolled in yesterday, with promoters of the exchange also targeted in the class action lawsuit. The suit, filed in Miami on behalf of investors, targets Bankman-Fried and well as celebrity promoters such as Tom Brady, Gisele Bündchen, Steph Curry and Larry David. The lawsuit says that the celebrity promoters “actively participated” in the “offer and sale of unregistered securities in the form of yield-bearing accounts”, but whether there are any grounds to these challenges are debatable.

Voyager Lawyer Takes up FTX Case

It was only a matter of time before FTX-related lawsuits began to appear, and it’s no surprise that a civil suit has come first, and a class action one to boot. Few details are known about the suit at the moment, but it’s also no surprise to see who is behind it – David Boies, the man also behind a class action lawsuit against failed crypto lender Voyager. The Voyager case targets CEO Steve Ehrlich, the Dallas Mavericks basketball team and its billionaire owner Mark Cuban, and the premise could well be similar here.

The core issue is an easy one to understand – that Bankman-Fried along with the promoters pushed yield-bearing products onto customers which were not certified in the U.S. and, allegedly, come under the bracket of being securities. While Bankman-Fried’s actions while running FTX, and comments he has made since FTX’s collapse, are clearly worth of legal investigation, the question of whether individuals who were paid to promote FTX did anything wrong is a grey area.

If Bois can prove that Brady, David et al promoted FTX without the public understanding that they were being paid for their services, or they promoted FTX services that they weren’t paid to do, then he may have a case, but it’s pretty clear that if Larry David is appearing in an FTX television commercial then he’s being paid to do so and not because he genuinely wants people to use the exchange. It’s not like he posted a ref link underneath the ad.

There will of course be more cases against Bankman-Fried particularly in the months to come as the fallout becomes properly understood, but this case, while headline-grabbing, will probably die a swift death.

Just…curb your enthusiasm, alright?