What just happened? Remember all the outcry when Larry David appeared in a Super Bowl commercial for now-collapsed crypto exchange FTX? The comedian probably wishes he'd never took part in the ad, too, given that he's one of several celebrities named in a lawsuit against the platform's former CEO Sam Bankman-Fried.
FTX's implosion earlier this month rocked the crypto industry. After traders withdrew $6 billion in three days from the platform following news of an FTC investigation into FTX mishandling withdrawal requests and Binance backing out of a merger deal, the company filed for Chapter 11 bankruptcy protection in the US on Friday.
Now, a class action lawsuit has been launched by investor Edwin Garrison against Bankman-Fried claiming he misled customers and cost investors billions of dollars in damages. The suit also names celebrities and athletes who promoted FTX as co-defendants, they include David, Tampa Bay Buccaneers quarterback Tom Brady, supermodel Gisele Bündchen (Brady's ex-wife), Golden State Warriors guard Stephen Curry, baseball players Shohei Ohtani and David Ortiz, businessman Kevin O'Leary, and others.
Larry David getting sued for a commercial where he disavowed crypto is very Larry David https://t.co/sdGvNpn3aJ— Paul S (@pauls551) November 16, 2022
The lawsuit claims FTX was a Ponzi scheme targeting "unsophisticated investors from across the country" and that customers sustained $11 billion in damages. It adds that "part of the scheme employed by the FTX Entities involved utilizing some of the biggest names in sports and entertainment – like these Defendants – to raise funds and drive American consumers to invest in the [yield-bearing accounts], which were offered and sold largely from the FTX Entities' domestic base of operations here in Miami, Florida, pouring billions of dollars into the Deceptive FTX Platform to keep the whole scheme afloat."
As reported by The Guardian, some of the one-time celebrity supporters of FTX have been trying to distance themselves from the company. Brady has deleted several tweets tagging in Bankman-Fried from the company's Crypto Bahamas conference. Elsewhere, Miami Heat announced that its home arena, which has been called the FTX Arena since June 2021, will be getting a new name.
Bankman-Fried stepped down as CEO on November 11. FTX tweeted that he has no ongoing role at the firm, and he does not speak on its behalf.
Today Genesis Global Capital, @GenesisTrading's lending business, made the difficult decision to temporarily suspend redemptions and new loan originations.— Digital Currency Group (@DCGco) November 16, 2022
FTX's collapse prompted Treasury Secretary Janet Yellen to call for more effective oversight of the cryptocurrency market. It also led to Genesis Global Capital suspending customer redemptions in its lending business yesterday. Bitcoin, meanwhile, has fallen 20% this month and is around $16,500 at the time of writing. Almost exactly one year ago, BTC reached an all-time high of $68,789.