FTX Payments for Controversial Celebrity Sponsorships May Be Recovered Through Bankruptcy Process

Millions in payments were made to celebrities and sports organizations to promote the failed cryptocurrency exchange, and FTX now wants claw back those payments as it faces lawsuits brought by investors and customers.

Financial advisors of the now-bankrupt FTX are trying to reclaim money the controversial cryptocurrency exchange spent on celebrity endorsements and sponsorships leading up to a bankruptcy filing, even as some of those stars face individual lawsuits brought by investors who lost money.

The once-popular cryptocurrency exchange collapsed in late 2022, only a few years after it was launched and widely marketed as the go-to cryptocurrency exchange. The company is now bankrupt, and is embroiled in a far-reaching scandal for allegedly operating as a modern-day Ponzi scheme, causing widespread losses for investors.

FTX lawsuits have been filed against company executives, as well as a wide range of high net worth individuals and companies that promoted the platform, including celebrity endorsers like Shaquille O’Neal, Tom Brady, Steph Curry and others, as well as venture capitalist firms like Sequoia Capital.

Learn More About

FTX Crypto Lawsuits

Following the FTX exchange collapse, lawyers are pursuing FTX settlements from a number of companies and entities on behalf of investors who lost money.

Learn More About this Lawsuit SEE IF YOU QUALIFY FOR COMPENSATION

Cryptocurrency investors lost billions in digital assets virtually overnight as a result of the FTX scandal, and a growing number of individual lawsuits and class action claims seek to recovery money lost.

FTX’s founder, Sam Bankman-Fried, an outspoken advocate for cryptocurrency, resigned shortly after the company collapsed. However, evidence arose soon after that Bankman-Fried had been freely transferring FTX investors’ money into his Alameda Research investment firm to use for trading, which lost massive amounts of money on risky investments. It is illegal to use investors’ funds this way, and Bankman-Fried has since been arrested and faces numerous criminal charges.

FTX Trading Ltd. filed a statement (PDF) in bankruptcy court late last month, announcing plans to seek to recover millions it paid to celebrity endorsers for promoting the failed platform. The group says it needs to do this to recover enough capitol to pay off debtors as it moves through the bankruptcy process and is asking the Court to approve of the plan.

The statement indicates FTX paid millions to big celebrity names over the years, and now thinks it should get that money back.

According to information revealed in the statement, FTX is hoping to recover nearly $750,000 it paid to Shaquille O’Neal, more than $300,000 it paid tennis star Naomi Osaka, and nearly $270,000 it paid to David Ortis. In addition, the company indicates it paid more than $400,000 to the Golden State Warriors and $250,000 to the Miami heat. It also paid millions to Fortune Media, Formula-1 racing, the Coachella Music Festival, Games Workshop and others, including Major League Baseball; which was paid at least $4.9 million and required umpires to wear FTX patches on their uniforms.

While the advisors are asking the court to reverse those payments, the financial advisors note that they are unlikely to recover all of the money spent.

FTX Investment Lawsuits

Starting in November 2022, investors began filing FTX class action lawsuits against various celebrity endorsers, who they say helped FTX in its scam by making it appear like a lucrative, safe and legal way to invest, when it was actually a Ponzi scheme. The lawsuits claim they did this through deceptive misrepresentations and omissions in their endorsements of the platform.

Given common questions of fact and law raised in cryptocurrency exchange lawsuits currently pending in U.S. District Courts nationwide, the lawsuits have been consolidated for pretrial proceedings and coordinated discovery before U.S. District Judge Michael Moore in the Southern District of Florida.

It is expected that U.S. District Judge Moore will select a small group of representative “bellwether” cases for early trial dates, to help gauge how juries are likely to respond to certain evidence regarding the mounting allegations against the failed cryptocurrency exchange.

While the outcomes of these bellwether trials will not be binding on other plaintiffs, they may help drive the parties toward FTX settlements that would avoid the need for potentially hundreds of eventual individual class action trials to be held.

Plaintiffs say firms like Sequoia, which was the target of a complaint filed in early May, funded FTX’s scheme to defraud its investors, and should be held liable for funds lost by cryptocurrency investors.

The lawsuits indicate the firms, and the endorsers, should have ensured any public statements they made about the company, like how investors’ money would be secure, were actually true. Investors claim FTX’s collapse, and the revelations which appear to show the allegedly illegal actions by Bankman-Fried, prove that financiers and endorsers did not do their due diligence before making public statements in support of the exchange.

1 Comments

  • CindySeptember 20, 2023 at 11:31 am

    I'm willing to talk about my experience investing in bitcoin. You can, however, get your stolen bitcoins back. I was taught that recovering bitcoin was impossible, therefore I never thought it was conceivable. I recently lost close to $55,000 after falling for a forex scam that promised absurdly large returns. I looked everywhere for assistance before finding a Folkwin Expert Recovery article onl[Show More]I'm willing to talk about my experience investing in bitcoin. You can, however, get your stolen bitcoins back. I was taught that recovering bitcoin was impossible, therefore I never thought it was conceivable. I recently lost close to $55,000 after falling for a forex scam that promised absurdly large returns. I looked everywhere for assistance before finding a Folkwin Expert Recovery article online. When I telephoned Folkwin Expert Recovery, my excitement was once more total. Get in touch with Folkwin Expert Recovery as soon as possible. They are a registered hacking group that can help with a quick and efficient bitcoin recovery. at: Folkwinexpertrecovery (AT) tech-center (DOT) com

Share Your Comments

I authorize the above comments be posted on this page*

Want your comments reviewed by a lawyer?

To have an attorney review your comments and contact you about a potential case, provide your contact information below. This will not be published.

NOTE: Providing information for review by an attorney does not form an attorney-client relationship.

This field is for validation purposes and should be left unchanged.

More Top Stories

Leadership Development Committee for Suboxone Dental Injury Lawyers Established in Federal MDL
Leadership Development Committee for Suboxone Dental Injury Lawyers Established in Federal MDL (Posted yesterday)

The U.S. District Judge presiding over all Suboxone lawsuits has created a mentorship program to use the litigation to provide some attorneys an opportunity to gain experience in handling complex federal multidistrict litigations.

Gilead Settlement Resolves 2,625 HIV Drug Lawsuits Pending in Federal Courts for $40M
Gilead Settlement Resolves 2,625 HIV Drug Lawsuits Pending in Federal Courts for $40M (Posted 3 days ago)

Gilead says it will pay $40 million to resolve HIV drug lawsuits over Truvada, Atripla, Viread, Stribild and Complera pending in the federal court system, involving claims that the the company sat on safer formulations of the drugs for years to increase profits.