A class action lawsuit filed Tuesday alleges that crypto platform FTX and former CEO Sam Bankman-Fried violated Florida law, misled customers and cost investors billions of dollars in damages.
The lawsuit also names some of the athletes and celebrities who have promoted the platform, including Tampa Bay Buccaneers quarterback Tom Brady and model Gisele Bündchen, his ex-wife; Golden State Warriors guard Stephen Curry; and businessman Kevin O’Leary.
The lawsuit alleges US customers suffered $11 billion in damages and accuses the exchange of targeting “unsophisticated investors across the country.”
FTX and Bankman-Fried did not immediately respond to requests for comment. NBC News has contacted all named parties in the lawsuit.
The lawsuit was filed in the U.S. District Court for the Southern District of Florida by investor Edwin Garrison, who claims he purchased an unregistered security in the form of a “productive account”.
Many crypto companies, including FTX offered accounts that offered customers a return on assets held on their platforms, an offer that was subject to regulatory scrutiny. Earlier this year, another crypto platform, BlockFi, paid a $100 million fine to the Securities and Exchange Commission to pay the fees associated with its offering of such performance accounts (YBAs).
Garrison says he lost money after the crypto exchange was forced to block customers from withdrawing funds.
The lawsuit says part of FTX’s scheme was to enlist celebrities “to raise funds and entice American consumers to invest in YBAs” to keep the exchange afloat.
The lawsuit blames Bankman-Fried and the host of celebrities who have promoted the company for losses suffered by investors.
Larry David, the “Curb Your Enthusiasm” star who appeared in a Super Bowl ad for FTX, is also named in the lawsuit.
The Golden State Warriors are also named in the lawsuit after the team partnered with FTX this year and unveiled the company’s logo on the grounds of the team’s arena, Chase Center.
The lawsuit says Garrison, of Oklahoma, trusted the firm “after being exposed to some or all of defendants’ misrepresentations and omissions regarding the deceptive FTX platform…and executed trades on the deceptive FTX Platform in reliance on such misrepresentations and omissions.”
“As a result, Plaintiff Garrison suffered damages for which Defendants are liable,” it read.
The lawsuit is another blow to the beleaguered company, which would once have valued at $32 billion. Last week, Bankman-Fried stepped down as CEO and FTX has announced that it is filing for Chapter 11 bankruptcywhich allows a company to reorganize and keep the business alive while it develops a plan to pay off its creditors.
John J. Ray, the new CEO of FTX Group, assured “every employee, customer, creditor, contractor, shareholder, investor, government authority and other stakeholder” that the bankruptcy would be conducted with the utmost rigor and transparency.
The Securities and Exchange Commission and the Department of Justice are currently investigating FTX.
Rob Wile contributed.