Press Article: Celebrity Endorsers Cleared in FTX Lawsuit, Some Claims Still Active
In a significant ruling this week, U.S. District Judge K. Michael Moore largely dismissed claims against prominent celebrities linked to the collapsed cryptocurrency exchange, FTX. Investors had alleged that stars like Tom Brady, Naomi Osaka, and Larry David were complicit in FTX’s fraudulent activities but failed to prove their knowledge of the wrongdoing.
The court’s opinion noted that while the behavior of these celebrity endorsers may reflect negligence or recklessness, it did not demonstrate that they had intent to deceive investors. Judge Moore stated, "While this behavior demonstrates that defendants were uninformed, negligent, or even reckless, it does not demonstrate that defendants had any knowledge of FTX’s fraud," further solidifying the celebrities’ defense against the bulk of the claims.
However, the ruling did not entirely dismiss the lawsuit, as elements relating to the promotion of unregistered securities remain viable, leaving open the possibility for future legal action. Plaintiffs may amend their complaint and retry against these high-profile figures.
FTX, once a giant in the cryptocurrency landscape, collapsed in November 2022, resulting in a monumental bankruptcy that erased billions in investor funds. Central to its downfall was its founder, Sam Bankman-Fried, who mismanaged customer assets to cover risky bets made by the firm. Now serving a 25-year prison sentence for fraud, Bankman-Fried’s legal team continues to assert that he was denied a fair trial.
The ruling marks a pivotal moment for the celebrities involved, who had built lucrative partnerships with FTX and associated sports teams before the company’s abrupt failure. As the cryptocurrency landscape evolves, the implications of this legal saga will resonate in future endorsement deals across the industry.
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