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Celebrities Tom Brady and Larry David Receive Legal Exoneration in FTX Case; Majority of Parties Dismissed

Judge Throws Out Majority of Lawsuit Accusations Toward Tom Brady, Larry David, and Other Celebrities, Alleging Endorsement of FTX

,   and  ASMedia
3 min read
Judge dismisses majority of claims against celebrities Tom Brady, Larry David, and others, accusing...
Judge dismisses majority of claims against celebrities Tom Brady, Larry David, and others, accusing them of endorsing FTX.

New Take

Quick Takeaway

  • The majority of charges filed against celebrities involved in promoting the defunct crypto exchange FTX have been dismissed by a judge as of this week.
  • The plaintiffs had failed to prove that the famous endorsers, like Larry David, Naomi Osaka, and Tom Brady, were privy to FTX's fraudulent operations.
  • However, lawsuits related to celebrities endorsing unregistered securities persist, particularly in the states of Florida and Oklahoma for alleged violations of their securities laws.

Scene Unveiled

In a ruling issued on Thursday, U.S. District Judge K. Michael Moore concluded that FTX investors could not provide proof that the celebrities were aware of the fraudulent dealings within the crypto exchange.

Among the celebrities named in the lawsuit are athletes like Tom Brady, Stephen Curry, and Naomi Osaka, the Golden State Warriors basketball team, comedian Larry David, and "Shark Tank" judge Kevin O'Leary.

The judge's decision notes that while the celebrities' actions reflect negligence or recklessness, they did not possess knowledge of FTX's fraud nor the intent to deceive or mislead investors.

The judge, however, left the door open for the plaintiffs to amend their complaint and potentially re-initiate legal action against the celebrities. Remaining active is the lawsuit's portion focusing on the endorsement of unregistered securities.

Prior to its sudden collapse in late 2022 and subsequent bankruptcy filing, FTX boasted celebrity endorsements, team partnerships, political contributions, and was headed by a high-profile figure, Sam Bankman-Fried. The crypto exchange provided customers the ability to buy, sell, and gamble on digital coins and tokens' future prices.

The exchange's CEO, Bankman-Fried, was found to have criminally mismanaged the business by using customer funds to support risky bets elsewhere. This mismanagement led to the company's bankruptcy and the loss of billions of dollars in investor funds. Bankman-Fried serves a 25-year prison sentence for fraud and related offenses, having filed an appeal last fall, stating he was unfairly judged heading into the trial.

Edited by Andrew Hayward

Daily Debrief Newsletter

Important to Note: Two state-level claims regarding the sale of unregistered securities in Florida and Oklahoma still stand. These could hold the celebrities accountable even without proof of their knowledge of the unregistered securities' status under these laws. The plaintiffs have the chance to modify their complaint, introducing new defendants or claims, which may impact the lawsuit's progression. Some celebrities, such as Shaquille O'Neal, have reached settlements with investors thus far, terms yet to be disclosed. FTX's bankruptcy proceedings continue, with customers receiving a repayment plan approval.

  1. Despite the dismissal of most charges against celebrities endorsing FTX, lawsuits focusing on unregistered securities endorsements persist, particularly in Florida and Oklahoma.
  2. Tom Brady, Stephen Curry, Naomi Osaka, the Golden State Warriors, Larry David, and Kevin O'Leary are among the celebrities who have been named in lawsuits related to their endorsement of crypto investments.
  3. Celebrities' endorsements of cryptocurrencies, tokens, and crypto exchanges in pop-culture and entertainment have become increasingly common, with some celebrities, like Shaquille O'Neal, reaching settlements with investors.
  4. Critics of these endorsements argue that celebrities should be held accountable for possibly endorsing unregistered securities, even without in-depth knowledge of the specific regulations in the states they are operating in.
  5. FTX, a crypto exchange that was headed by Sam Bankman-Fried and boasted celebrity endorsements, filed for bankruptcy in late 2022 after Bankman-Fried was found to have criminally mismanaged the business, leading to the loss of billions of dollars in investor funds.
  6. Cryptocurrency investments, like those offered by FTX, can be highly volatile, with the potential for both significant gains and losses.
  7. ICOs (Initial Coin Offerings) are another avenue for investing in cryptocurrencies, though they also come with their own set of risks and regulations, making it crucial for investors to do thorough research before engaging in any crypto investment.

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