Cryptocurrency exchange FTX imploded into bankruptcy, and a number of big-name celebrities, including Tom Brady, Madonna, Serena Williams, and more, were named in a class-action lawsuit promoting its NFTs – here’s why.
Numerous big-name celebrities sued over promoting failed cryptocurrency
The celebrities are household names: Tom Brady, Madonna, Gwyneth Paltrow, Justin Bieber, Serena Williams, Jimmy Fallon, baseball Hall-of-Famer David Ortiz, and others are all facing lawsuits for promoting failed crypto NFTs.
A class-action lawsuit was filed against numerous celebrities for promoting Bored Ape Yacht Club NFTs, which alleges these public figures did not properly disclose their own involvement with digital financial institutions, the Orange County Register reported.
The first lawsuit was filed in November by an FTX investor over their endorsement of the now-disgraced platform, CNN reported.
This CEO of FTX testified on Capitol Hill, saying that most investors in the now-bankrupt cryptocurrency exchange are not expected to be able to recover their money.
In addition, people who invested money into Bored Ape NFTs are finding the digital investments are not worth what they paid for them, as along with FTX, the NFT market has imploded.
About NFTs and Bored Ape Yacht Club
NFT stands for non-fungible token. Bored Ape Yacht Club is an NFT collection on the Ethereum blockchain, and Ether, the second-most popular after leader Bitcoin, is the native cryptocurrency of the platform.
Bored Ape Yacht Club’s one-of-a-kind works of digital art and other collectibles were purchased by various celebrities, who also promoted the NFTs.
The digital blockchain certifies authenticity and ownership, which can be transferred by the owner, allowing NFTs to be sold and traded. However, the value is wholly subjective – and as we’ve seen in recent months, prone to collapse.
Authorities seek criminal prosecutions over FTX
In late December, The Securities and Exchange Commission (SEC) charged two former FTX executives with wire fraud, securities fraud, and commodities fraud, FOXBusiness reported. Former Alameda Research CEO Caroline Ellison and Former Chief Technology Officer of FTX Trading LTD Zixiao (Gary) Wang secretly pleaded guilty to the charges. Ellison, 28, faces up to 110 years in prison after making a plea agreement deal which includes $250,000 bail, surrender of travel documents, and forfeiture of assets, Yahoo reported. However, her recently unsealed plea agreement with the US attorney’s office showed if she fully cooperates with authorities, she will only pay restitution and won’t be further prosecuted criminally except for possible criminal tax violations.
In mid-December, FTX founder Sam Bankman-Fried was arrested in the Bahamas and was extradited to the United States, where he appeared in a New York courtroom. He was later released on a $250 million bond. In early January, Bankman-Fried pleaded not guilty to criminal charges, including two counts of wire fraud and six counts of conspiracy-related charges. A court date was set for October 2, 2023, CNN reported.
