Ex-billionaire Sam Bankman-Fried and crypto exchange FTX were sued Tuesday alongside several celebrities, including Tom Brady and Shaquille O’Neal, over an alleged effort to use the stars’ reputation to trick customers into participating in a “Ponzi scheme,” according to court documents.
The lawsuit, filed in Miami, alleges that “American consumers collectively sustained over $11 billion dollars in damages” following the rapid collapse of both FTX and founder Bankman-Fried, according to the complaint.
Complainant Edwin Garrison alleged that the purpose of using stars like Stephen Curry, who participated in the company’s “#notanexpert” ad campaign, and Tom Brady was to target “unsuspecting and unwitting” first-time crypto investors.
“FTX’s fraudulent scheme was designed to take advantage of unsophisticated investors from across the country, who utilize mobile apps to make their investments,” the complaint reads. “As a result, American consumers collectively sustained over $11 billion dollars in damages.”
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The evaporation of Bankman-Fried’s $16 billion fortune over the course of just a few days following a liquidity crunch at FTX is one of the largest losses of wealth at such a pace in history, according to Bloomberg.
Bankman-Fried and FTX are both under investigation by the U.S. Securities and Exchange Commission, Department of Justice, Commodity Futures Trading Commission and New York-based federal prosecutors, following reports that FTX mishandled client funds by loaning more than $10 billion of customers’ assets to Alameda Research, a trading house also founded by Bankman-Fried.
At least $1 billion, and potentially up to $2 billion in customers’ funds are still missing, Reuters reported Nov. 11, citing two anonymous sources.
In a text message to Reuters, Bankman-Fried disagreed with the outlet’s claim that FTX “secretly transferred” the funds to Alameda, claiming that the company “had confusing internal labeling and misread it.”
When asked about the missing money, Bankman-Fried simply responded “???” and did not elaborate further, according to Reuters.