Former Executive Backs Up Lawsuit Against FTX Celebrity Promoters

A former FTX regulatory officer, Daniel Friedberg, has come forward to back the lawsuit against FTX celebrity promoters, adding weight to the allegations leveled against the cryptocurrency exchange.

Due to his knowledge of the company’s internal compliance practices, Friedberg’s decision to support the legal action is a significant blow to FTX.

Notably, the lawsuit started mid-November last year, a few days after the exchange shut down.

As revealed in the proposed amended complaint, Friedberg gave evidence that FTX promotional activity surfaced from Florida.

Daniel Friedberg was the compliance chief of the US arm of FTX and FTX’s chief regulatory officer. 

So, his evidence could negate the defendants’ claims, stating that FTX’s activity has no connection with Florida, including the Miami court. 

Friedberg also referred to the vice president of the US arm of FTX, Avinash Dabir, noting that he is based in Miami. He added that Dabir performed operations in the city from an FTX office in 2021.

He said that Dabir was responsible for overseeing FTX brand ambassadors, of which the court defendants are no exception.

The brand ambassadors noted were comedian Larry David, Shaquille O’Neal, a former basketball player, retired NFL player Tom Brady, and FTX founder Sam Bankman-Fried.

Other celebrity promoters include entrepreneur Kevin O’Leary, Steph Curry, a basketball star, with his team, the Golden State Warriors, and Brady’s ex-wife, model Gisele Bundchen.

Meanwhile, the class action lawyers saw that Friedberg’s statements countered the defendants’ claims.

They claimed it’s unlikely for such a conspiracy to erupt from Florida because the exchange did not intend to expand to Miami until September last year. It was after the move to Miami that they enacted the promotional agreements.

In the meantime, the lawsuit class action lawyers are assessing the new evidence from the defendants to amend the case. 

Several crypto endorsements for celebrities have often landed in lawsuits. This happens when misleading statements regarding a cryptocurrency’s potential returns, security, or legitimacy make investors suffer financial losses.

Additionally, endorsing or promoting unregistered securities without complying with securities laws can have legal consequences.

An example is the case between the SEC and Jake Paul, Lindsay Lohan, and some other celebrities over failing to reveal a paid crypto promotion.

Aside from this, celebrities might unknowingly or intentionally participate in pump-and-dump schemes, artificially inflating prices through promotion and then selling their holdings, which can result in securities fraud charges.

As such, celebrities must comply with relevant regulations to avoid legal disputes and protect investors.

-Featured image from Pexels, chart from Tradingview.com