A class action lawsuit filed by attorney Adam Moskowitz has been filed against FTX’s former chief executive and a host of celebrities in a court in Florida. The complaint argues that the defendants had perpetrated a Ponzi Scheme.
A Ponzi Scheme Perpetrated on American Consumers
Among the people named in the complaint are Sam Bankman-Fried himself who stepped down from the disgraced cryptocurrency exchange after it transpired that he had used consumer funds to fund Alameda Research, a crypto trading company he owned.
Other people against whom the lawsuit is launched include popular personalities, celebrities and athletes, including Larry David, Naomi Osaka, Shaquille O’Neal, Kevin O’Leary, Steph Curry, Tom Brady, and more. They are all accused of having participated in and maintained what the lawsuit alleges is a “house of cards, a Ponzi scheme where FTX Entities shuffled customer funds between their opaque affiliated entities.”
This lawsuit, unlike the one against Kim Kardashian and Floyd Mayweather Jr. may in fact work. The lawsuit further argues that the scheme perpetrated by FTX Entities involved the help of popular personalities, such as the defendants, to beguile consumers to invest in the exchange.
The news about FTX’s debacle has prompted a number of prominent organizations to sever ties, one of those being Team SoloMid, a competitive gaming organization, which said it’s suspending its relationship with the company. Miami Heat, whose home basketball court is known as the FTX Arena, the result of a naming rights purchase, is also opting out of its ties with the exchange.
A number of celebrities have already been working behind the scenes to ensure that they buff up their public image after previously showing amicability with Bankman-Fried and FTX. Brady, for example, has been “caught” deleting old tweets in which he showed appreciation for the now-disgraced CEO.
It may have all just worked had it not been for the fact that FTX ended up maintaining $1 billion in liquidity against $9 billion in liabilities. The downturn can be blamed on the cryptocurrency market rout that began in the summer, but it’s hardly just that, as Binance previously suggested that FTX had committed the ultimate sin, having misused consumer funds.
Binance was prepared to buy out the troubled exchange, but a quick audit of the company made the competitor pull out of the deal immediately. Bankman-Fried was attempting to raise capital all the while, hoping that he can repay consumers, but FTX has now officially filed for bankruptcy and it’s unlikely that the future holds anything good for either the company or its former CEO.