The conviction of Sam Bankman-Fried (SBF), founder of FTX Exchange, for fraud and conspiracy, has led to a shift in focus among FTX investors, with a growing emphasis on the role of influencers in the collapse of the firm.
FTX Investors Files Lawsuit Against Influencers
According to reports, FTX investors who claim to have lost billions in the collapse of the firm are now pursuing a sweeping class-action suit in a Miami federal court, seeking not only to hold Bankman-Fried accountable but also to pin the blame on celebrities, bankers, accountants, lawyers, and firms that were part of the former FTX empire’s ecosystem.
Central to the investors’ class-action suit is the involvement of celebrities in promoting FTX. Notably, high-profile individuals, including Larry David and Tom Brady, featured in flashy advertisements endorsing the exchange.
The celebrities’ prominence and wealth make them attractive targets for investors looking to recover their losses, particularly since SBF is said to be essentially broke. In past high-profile business collapses, class-action suits targeting key players have resulted in substantial settlements, providing a glimmer of hope for FTX investors moving forward.
The class action aims to cover hundreds of thousands of investors and seeks unspecified damages for the $8 billion that allegedly disappeared during the FTX collapse. While the guilty verdict against SBF does not directly establish the contention that celebrities should have known about the wrongdoing, legal experts suggest that the momentum generated by the conviction will benefit the investors’ case.
Settlements and the Road Ahead
It is worth mentioning that a few FTX endorsers have already reached settlements with investors on undisclosed terms. Consequently, the recent conviction of SBF may encourage other defendants to consider settlements.
However, for those who choose to put up a fight, it could take years to resolve the claims. Historical cases like those involving Bernard Madoff and Allen Stanford played out over an extended period, and the complexity of the FTX case may make it even more longer.
SBF and his fellow executives who testified against him could face orders to pay restitution to victims in the criminal case. On the civil side, the U.S. Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have also filed suits against Bankman-Fried.
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