SAN FRANCISCO — When the FTX cryptocurrency market imploded last fall, Tom Brady, the American quarterback who won seven Super Bowls, made an urgent phone call.
He called Sina Nader, director of partnerships at FTX. The exchange’s staff were in the middle of a crisis meeting with Sam Bankman-Fried, its embattled founder. Nader couldn’t take the call. “I never would have expected to turn down a call from Tom Brady,” he said.
As an “ambassador” for FTX, Brady had appeared at the company’s conference in the Bahamas and in television commercials touting the exchange as the “most trusted” institution in the loosely regulated world of cryptocurrency.
His money was also at stake. As part of an endorsement deal Brady signed in 2021, he had been paid $30 million by FTX, a deal that consisted almost entirely of FTX stock, three people with knowledge of the deal said. Supermodel Gisele Bündchen, Brady’s wife at the time, was paid $18 million in FTX stock, one of the people said.
Now FTX is bankrupt and Bankman-Fried is facing criminal fraud charges. Brady, 45, and Bündchen, 42, have been sued by a group of FTX clients seeking compensation from the celebrities who promoted the market. Their situation is the most high-profile example of a humiliating reckoning faced by actors, athletes and other celebrities who were quick to embrace the easy money and online hype of cryptocurrency.
The crash last year ended the celebrity cryptocurrency bonanza.
In October, the US Securities and Exchange Commission (SEC) ordered Kim Kardashian to pay $1.26 million for failing to make appropriate disclosures when endorsing the EthereumMax token. In December, a lawyer in California sued two cryptocurrency companies, MoonPay and Yuga Labs, accusing them of using a “broad network of A-list musicians, athletes, and celebrity clients” to mislead investors.
In March, the SEC charged actress Lindsay Lohan, online influencer Jake Paul, and musicians including Soulja Boy and Lil Yachty with illegally promoting crypto assets. And in May, after months of failed attempts, a process agent served court documents on Shaquille O’Neal, the retired basketball star who was sued for promoting FTX, legal documents reveal.
Tech startups offer stars a way to earn money while staying at the forefront of internet culture; celebrities help young companies reach a larger audience.
Of all the startups that recruited celebrities to promote cryptocurrency, FTX was perhaps the most enthusiastic. As Bankman-Fried tried to make FTX a household name, he made a list of celebrities he could imagine promoting it, Nader recalled. Brady’s name topped the list.
In June 2021, Brady and Bündchen agreed to a deal with Bankman-Fried, praising the “breakthrough FTX team.” Brady seemed genuinely interested in cryptocurrency, Nader said.
In 2021, Brady and Bündchen starred in a $20 million advertising campaign for FTX, with commercials that aired during football games. Brady also posted TikTok videos with Bankman-Fried from FTX’s headquarters in the Bahamas, where he spoke at a conference in front of hundreds. Bündchen also appeared at the conference as FTX’s director of environmental and social initiatives.
When FTX collapsed last November, the company’s $32 billion valuation — including the $48 million worth of Brady and Bündchen shares — plummeted to zero.
In December, attorney Adam Moskowitz and the Boies Schiller Flexner law firm filed a lawsuit in a Florida federal court accusing Brady and Bündchen of misleading investors. Among the other defendants are comedian Larry David, basketball star Steph Curry and tennis player Naomi Osaka, all of whom promoted FTX.
“None of these defendants performed any due diligence prior to marketing these FTX products to the public,” the lawsuit states.
By: Erin Griffith and David Yaffe-Bellany
BBC-NEWS-SRC: http://www.nytsyn.com/subscribed/stories/6807611, IMPORTING DATE: 2023-07-17 19:10:06
#Celebrities #trouble #promoting #cryptocurrencies