After naming tennis star Naomi Osaka and NFL quarterback Tom Brady as respondents in the lawsuit filed on behalf of FTX investors, Brady and NBA point guard Stephen Curry are currently being investigated by the Texas financial regulator. They have both been indicted for being among the celebrities who promote and advertise the now-bankrupt cryptocurrency exchange which is a violation of securities laws.
Joe Rotunda, the director of enforcement at the Texas State Securities Board says the agency is probing the payment collected by these celebrities to promote the FTX United States brand. They are also checking to understand the level of disclosure that was made and how accessible they were to FTX retail investors.
For now, Rotunda claimed that celebrity endorsements are not an immediate priority but are crucial to the big picture of the FTX implosion and bankruptcy filing.
Therefore, they are still under the radar of the regulator. So far, celebrities like Gisele Bündchen, the Golden State Warriors basketball team, NBA player Udonis Haslem, co-creator of Seinfeld Larry David, of course, Tom Brady, and Stephen Curry have been listed in the lawsuit.
Celebrities Named For Touting Now-Bankrupt FTX
Founder and former Chief Executive Officer (CEO) of the FTX Derivatives Exchange Sam Bankman-Fried who resigned as the firm filed for bankruptcy, was equally named in the class action. The lawsuit was based on the basis that they “controlled, promoted, assisted in, and actively participated” in FTX Trading LTD and West Realm Shires Services Inc.
The FTX implosion and the chaos attached to it in terms of the regulator’s issue must be celebrities’ biggest lesson when it comes to touting crypto assets. All those concerned have directly and indirectly experienced the reputational, legal, and regulatory risks associated with such activities.
Recently, American popular media personality Kim Kardashian paid a heavy penalty for promoting a crypto token offered by EthereumMax (EMAX) after she was charged by the United States Securities and Exchange Commission (SEC).
A retired securities lawyer and former Georgetown University law professor identified as John Olson said “If a celebrity says, ‘I’ve looked into this investment and it’s terrific and you ought to put your money into it — and if they haven’t looked into it, that could be a misrepresentation.”