Celebrities including NFL star Tom Brady and comedian Larry David have been named in a class-action lawsuit against cryptocurrency exchange FTX, accusing them of promoting the bankrupt firm.

FTX, one of the largest cryptocurrency exchanges in the world, it went bankrupt last week — a staggering reversal of fortune for a company once valued at $32 billion.

The Bahamas-based company and its founder, Sam Bankman-Fried, are under investigation by state and federal authorities for allegedly investing depositor funds in ventures without their approval.

Before going bankrupt, FTX was known for using high-profile figures to promote its products.

It also had the naming rights to a Formula One racing team, as well as a sports arena in Miami.

Its ads featured Seinfeld creator David, as well as Brady, Tampa Bay Buccaneers quarterback, basketball players Shaquille O’Neal and Stephen Curry, and tennis star Naomi Osaka.

The lawsuit, filed late Tuesday, said these stars brought instant credibility to the platform and are therefore just as guilty as Mr Bankman-Fried.

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Image:
The FTX arena. photo: AP

Celebrities have kept the ‘plan’ afloat

This isn’t the first time a celebrity has fallen foul of promoting cryptocurrency. In October, Kim Kardashian agreed to pay $1.26m (£1.12m) to pay off the expenses for a post on his Instagram.

The reality star has not revealed that she has been paid $250,000 (£220,000) for promoting a cryptocurrency asset on her feed.

“Part of the scheme employed by the FTX Entities involved using some of the biggest names in sports and entertainment — such as these defendants — to raise funds and lure American consumers into investing… by pouring billions of dollars into the deceptive platform FTX to keep the whole scheme afloat,” the lawsuit said.

Class action attorney Adam Moskowitz filed the lawsuit in the Southern District of Florida.

Mr. Moskowitz is the attorney representing the victims in the collapse of a residential tower in the state.

Sam Bankman-Fried, 30, founder of FTX
Image:
Sam Bankman-Fried, 30, founder of FTX

“Very serious allegations”

The crisis has raised further questions about the regulation of cryptocurrencies and other digital assets.

The US House of Representatives Financial Services Committee said it expected to hear from Bankman-Fried, who now faces potential civil and criminal charges.

“The fall of FTX caused massive damage to over a million users, many of whom were ordinary people who invested their hard-earned cash in cryptocurrency exchange FTX, only to see them disappear within seconds,” he said. Maxine, chair of the committee. Waters said.

Singapore’s finance minister and deputy prime minister said the collapsed FTX exchange had “very serious charges that amount to potential fraud”.

Lawrence Wong said recent developments in the cryptocurrency market have strengthened the city-state’s position that they were “on the right track” in focusing on digital asset innovation, but also took a strong stance against speculation and trade. of cryptocurrencies by retail investors.

Bitcoin and other cryptocurrencies have taken a major hit while FTX teetered on the edge of insolvency.

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