“I’m never wrong about these things, ever,” a dismissive and mocking Larry David said earlier this year in the now infamous Super Bowl ad for investment cryptocurrency exchange FTX.
While Seinfeld the co-creator rejected the wheel, coffee, the US Constitution, electricity, putting a man on the moon and several innovations in the much-acclaimed commercial, it seems that David may have been right about the now-collapsed FTX, for all the good it’s going to make him.
Along with the likes of Tom Brady, Gisele Bundchen, Stephen Curry and the Golden State Warriors, Shaquille O̵[ads1]7;Neal and Naomi Osaka, David is now a defendant in a class-action lawsuit against the now-defunct FTX and its former CEO Sam Bankman-Fried.
“In addition to the conduct of defendant Sam Bankman-Fried, as described in this complaint, some of the biggest names in sports and entertainment have either invested in FTX or served as brand ambassadors for the company,” the jury trial filing filed in federal court said. in Florida today by Edwin Garrison on behalf of all “American consumers” who “collectively received over $11 billion in damages” from FTX’s recent crash. “A number of them hyped FTX to their social media fans, driving retail to adopt the deceptive FTX platform,” the graphic-heavy class action lawsuit adds ( read it here ).
As for Curry, the NBA legend admitted in another heavy-handed TV spot that he wasn’t that knowledgeable about crypto. He added, looking at the camera: “I don’t have to be. With FTX, I have everything I need to buy, sell and trade crypto safely.”
Maybe not so much now that he and the others have to lawyer up.
The heavy use of celebrities convinced consumers to pour “billions of dollars into the deceptive FTX platform to keep the whole scheme afloat,” according to the filing by attorney Adam Moskowitz and a brigade of other lawyers. “The deceptive FTX platform maintained by FTX Entities was really a house of cards, a Ponzi scheme where FTX Entities commingled client funds between its opaque affiliates, using new investor funds obtained through investments in the YBAs and loans to pay interest to old and to try to maintain the appearance of liquidity”, it also says, and gets to the big point.
And here it can actually get sticky for the celebrities who lent their names and images to FTX.
“Importantly, although Defendants disclosed their partnerships with the FTX Entities, they never disclosed the nature, extent, and amount of compensation they personally received in exchange for the promotion of the deceptive FTX Platform, as the SEC has explained that a failure to disclose this the information would be a violation of the anti-touting provisions of the federal securities laws,” the extensive filing notes. “Furthermore, none of these defendants performed any due diligence before marketing these FTX products to the public.”
Valued at more than $32 billion earlier this year, Bahamas-based FTX and its cousin, crypto trader Alameda Research, filed for Chapter 11 bankruptcy last week. The hard crash of the world’s third-largest crypto exchange came as Bankman-Fried and other executives failed to lure more investors to help wipe away billions and billions in losses due to doubts about the company’s business model and asset management. It also probably didn’t help that FTX is being investigated by the FTC, DOJ and others for moving investors’ money around without permission.
Citing recent rulings and fines against the likes of Kim Kardashian and ex-Boston Celtic Paul Pierce for failure to disclose approval of compensation, the complaint seeks unspecified actual, direct and compensatory damages that could run into the nine figures and beyond based on the consumer base FTX withdrew.
Undoubtedly, all the big names will hire big lawyers to help get them off the hook here. Although they may have to flip through the old Rolodex a little more than usual, as celebrity attorney David Boies is actually helping to represent Garrison in this action. Nevertheless, in the meantime, check out that Larry David ad that everyone thought was so funny during the 2022 Super Bowl: