FTX, a Crypto exchange platform, filed for voluntary bankruptcy following the exit of CEO Sam Bankman-Fried. Following his exit, investors filed a class action suit against Bankman-Fried, along with notable FTX spokespeople including Tom Brady, Kevin O’Leary, and the Golden State Warriors. A reported $1 Billion were missing as a result of the crypto collapse.
An FTX “Ponzi Scheme”?
For many folks, cryptocurrency is not easy to understand. For Sam Bankman-Fried, however, the platform seemed effortless to pick up. Could it have been so easy for Bankman-Fried to trick people who weren’t so familiar with the exchange?
Sam Bankman-Fried, sometimes called SBF, began his crypto journey by founding the trading house, Alameda Research. His knowledge of the crypto market and its trading strategies made Alameda a success. Following his accomplishments with Alameda Research, SBF launched FTX in 2019. His boastful attitude toward FTX reassured investors that the exchange platform was safe from failure. It was all a ruse.
2022 saw a fall in crypto prices, most notably with Do Kwon’s Terra Coin. And while SBF assured his clientele that his platform was immune, FTX was seriously affected. The trading platform had reportedly lost or misplaced billions. Allegedly, SBF’s companies borrowed money to keep the industry alive, even siphoning money from everyday FTX investors to meet these debt obligations. This plan, however, was not able to keep SBF’s mask on for very long. FTX and other subsidiaries founded by Bankman-Fried filed for bankruptcy on November 11, 2022.
What's Next for Investors?
It didn’t take long before investors and customers took legal action. A recent lawsuit alleged that Sam Bankman-Fried and FTX engaged in deceptive business tactics. FTX allegedly designed these fraudulent schemes to take advantage of investors across the US by shuffling investments between entities to keep an appearance of an affluent business.
Now, it’s more than just SBF and his FTX entities that are in hot water. Many prominent celebrities were involved in advertisements and campaigns that promoted the business. Famous actors and athletes like Larry David, Tom Brady, Naomi Osaka, Stephen Curry, and quite a few more are also being sued for assisting and promoting FTX cryptocurrency products. These big, household names were a sure-fire way to attract new and novice customers.
Many investors trusted these celebrity voices when purchasing FTX’s yield-bearing crypto accounts. Now, many of these investors are left wondering how their money could have disappeared so quickly given all the reassurance shoved in their faces. The lawsuit claims that unsuspecting Americans sustained over $11 billion in damages.
Can We Come Back From This?
While FTX spokespeople have yet to respond, Bankman-Fried has taken to twitter to address his mistakes. For many customers, this apology isn’t nearly enough.
If you have poured investments into FTX, and are now suffering for Bankman-Fried’s negligence, contact Shub Law Today. Anyone tricked by FTX’s deceptive yield-bearing accounts should not have to suffer. Tell your story to Shub Law to see how you can combat this.