Press Release
Judge Dismisses Most Claims Against Celebrity FTX Endorsers, But Scrutiny Remains
In a significant development, a federal judge has dismissed most claims against several high-profile celebrities who promoted the now-collapsed crypto exchange FTX. U.S. District Judge K. Michael Moore ruled that the plaintiffs failed to prove that stars such as Tom Brady, Naomi Osaka, and Larry David were aware of the fraudulent activities underlying FTX’s operations.
While the case against these celebrities has largely been cleared, Judge Moore noted that a portion of the lawsuit alleging that they endorsed unregistered securities will continue to move forward. The judge emphasized that although the celebrities’ actions may reveal negligence or recklessness, there was insufficient evidence to establish their knowledge of FTX’s fraudulent practices.
Among those named in the lawsuit are prominent athletes, including Stephen Curry and members of the Golden State Warriors, as well as investor Kevin O’Leary. The judge’s observation underscores the difficulty in linking celebrity endorsements to the fraud perpetrated by FTX’s founder, Sam Bankman-Fried, who is now serving a 25-year jail sentence following a conviction for fraud and related crimes.
FTX enjoyed extensive celebrity backing and significant partnerships with sports teams before its abrupt bankruptcy in November 2022, leaving billions in investor funds unaccounted for. Bankman-Fried’s mismanagement included using customer deposits to cover risky ventures, leading to the exchange’s dramatic fall from grace.
With the option for plaintiffs to amend their complaint, the legal fallout from FTX’s collapse continues to unravel, casting a lingering shadow over its celebrity endorsers. As the situation develops, the case serves as a stark reminder of the importance of due diligence in celebrity endorsements and the complexities of securities law.
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