FTX Investors Settle With Sam Bankman-Fried to Promote Promoters

The settlement, if approved by the judge, would free Bankman-Fried from civil liability just weeks after he was sentenced to 25 years in prison on fraud charges for stealing billions of dollars from FTX. According to the agreement filed Friday in federal court in Miami, the plaintiffs in the multi-district lawsuit will resolve all claims against them now and in the future.

In return, the 32-year-old fallen crypto idol will help him go after celebrities, social media influencers, and others who promoted FTX in a manner that caused him to lose money. Bankman-Fried will hand over all non-privileged documents detailing his assets and his investment in artificial intelligence start-up Anthropic, an affidavit certifying his net worth is negative, and documents regarding other defendants in the broader civil litigation .

Read More: FTX investors emboldened by guilty SBF’s attempt to convict promoters

That list of defendants has grown longer after multiple lawsuits filed in the wake of the FTX meltdown were consolidated into one case in Miami. Financiers and celebrity endorsers, including sports stars Tom Brady and Shaquille O’Neal and model Gisele Bündchen, were accused of promoting the exchange’s unregistered securities and luring investors into a Ponzi scheme.

And, if they prevail, plaintiffs could win more than they are losing. The settlement with the promoters is valued at approximately $1.3 million, according to a filing in the case.

Attorneys for Bündchen, O’Neal and Brady did not immediately respond to a request for comment on the settlement.

superstar ad

When FTX was in trouble, Bankman-Fried spent heavily on advertising, using the fame of athletes and other stars to raise the profile of his crypto empire. For example, an FTX affiliate said in a bankruptcy filing that pro football quarterback Trevor Lawrence received a $500,000 payment in September 2022.

According to the filing, the agreement includes a deal with Lawrence. Lawrence, who plays for the Jacksonville Jaguars, was selected by the Jaguars with the first overall pick in the 2021 National Football League draft and signed as an FTX endorser that year. His attorney, David A. Rothstein said he could not immediately comment on the settlement.

Read more: Bankman-Fried sentenced to 25 years in prison for FTX fraud

Bankman-Fried spokesman Mark Botnick said his client wants to make things right.

“Since the collapse of FTX, Mr. Bankman-Fried has been solely focused on returning asset values ​​to clients, which can and should be accomplished at current prices,” Botnick said. Referring to the plaintiffs’ attorney, Botnick said: “He looks forward to continuing to work with Adam Moskowitz and his team to make this happen.”

risk reward

In asking the judge overseeing the case to approve the settlement, the plaintiffs’ attorneys said they had taken into account the uncertain outcome and risks of the lawsuit against Bankman-Fried and decided that he would seek a settlement for the remainder of the trial. Will be valuable”, according to the filing.

Bankman-Fried was convicted at trial late last year and sentenced in late March. Prosecutors showed the 32-year-old misappropriated client funds from FTX to his affiliate hedge fund Alameda Research to spend on political donations, luxury real estate and speculative investments.

Bankman-Fried is in custody at the Metropolitan Detention Center in Brooklyn, New York, before being transferred to prison where he will serve his sentence. He plans to appeal his sentence and conviction.

The civil lawsuit is FTX Cryptocurrency Exchange Collapse Litigation, 23-MD-03076, U.S. District Court, Southern District of Florida (Miami).

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Published: April 20, 2024, 01:38 am IST