A class-action lawsuit filed Tuesday alleges that the crypto platform FTX and former CEO Sam Bankman-Fried violated Florida law, misled customers and cost investors billions of dollars in damages.
The lawsuit also names some of the athletes and celebrities that promoted the platform, including Tampa Bay Buccaneers quarterback Tom Brady and supermodel Gisele Bündchen, his ex-wife; Golden State Warriors guard Stephen Curry; and businessman Kevin O’Leary.
The lawsuit alleges that U.S. customers sustained $11 billion in damages and accused the exchange of targeting “unsophisticated investors from across the country.”
FTX and Bankman-Fried did not immediately respond to requests for comment. NBC News has reached out to all parties named in the lawsuit.
The suit was filed in U.S. District Court for the Southern District of Florida by investor Edwin Garrison, who says he purchased an unregistered security in the form of a ‘yield-bearing account.’
Many crypto companies including FTX offered accounts that gave customers a return on assets kept on their platforms, an offering that was the subject of regulatory scrutiny. Early this year, another crypto platform, BlockFi, paid a $100 million fine to the Securities and Exchange Commission to settle charges over its offering of such yield-bearing accounts (YBAs).
Garrison says he lost money after the crypto exchange was forced to stop customers from withdrawing funds.
The lawsuit states that a part of FTX’s scheme was to enlist celebrities ‘to raise funds and drive American consumers to invest in the YBAs’ to keep the exchange afloat.
The suit blames Bankman-Fried and the bevy of celebrities who promoted the company for the losses suffered by the investors.
Also named in the lawsuit is Larry David, the ‘Curb Your Enthusiasm’ star who appeared in a Super Bowl commercial for FTX.
Larry David stars in a Super Bowl commercial for the cryptocurrency exchange FTX.FTX
The Golden State Warriors are also named in the lawsuit after the team partnered with FTX this year and unveiled the company’s logo on the court at the team’s arena, the Chase Center.
The suit says that Garrison, from Oklahoma, put his trust into the company ‘after being exposed to some or all of Defendants’ misrepresentations and omissions regarding the Deceptive FTX Platform … and executed trades on the Deceptive FTX Platform in reliance on those misrepresentations and omissions.’
‘As a result, Plaintiff Garrison has sustained damages for which Defendants are liable,’ it reads.
The lawsuit is another blow for the embattled company, once reportedly valued at $32 billion. Last week, Bankman-Fried stepped down as CEO, and FTX announced that it was filing for Chapter 11 bankruptcy, which allows a company to reorganize and keep the business alive while it comes up with a plan to pay back its creditors.
John J. Ray, the new CEO of FTX Group, ensured ‘every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder’ that the bankruptcy would be conducted with the utmost thoroughness and transparency.
The Securities and Exchange Commission and Justice Department are now investigating FTX.