NFL quarterback Trevor Lawrence, along with popular YouTube influencers Kevin Paffrath and Tom Nash, have reached a settlement in a lawsuit related to their endorsements of the now-defunct FTX cryptocurrency exchange.
High-Profile Figures Face Similar Lawsuits
According to Bloomberg's report on September 16, the terms of the settlement have not been disclosed. This development marks the first resolution among more than a dozen celebrities and firms accused of assisting Sam Bankman-Fried, the Founder of FTX, in alleged investor deception. He is set to face a criminal trial in Manhattan next month.
Other high-profile individuals, including Tom Brady, Gisele Bundchen, Steph Curry, Shaquille O’Neal, and Larry David, who had endorsed FTX, are also facing similar lawsuits. These class-action suits have been consolidated in a federal court in Miami, along with complaints against venture capital and private equity firms that invested in FTX, such as Sequoia Capital and Thoma Bravo.
FTX garnered significant attention through celebrity endorsements, including securing naming rights to the Miami Heat’s arena and a Super Bowl commercial featuring Larry David.
Lawyers representing the plaintiffs in the $1 billion case against endorsers disclosed to Bloomberg that they are "engaged in ongoing confidential settlementdiscussions" with other defendants, suggesting a likelihood of more settlements in the FTX case.
The lawsuit alleges that the rise of FTX was significantly influenced by celebrity endorsements but asserts that these endorsers failed to disclose details of their deals and compensation to investors.
The Initial Lawsuit Alleges Lack of Disclosure in Celebrity Endorsement Deals
When the lawsuit was initially lodged, it asserted: “Though FTX paid Defendants handsomely to push its brand and encourage their followers to invest, Defendants did not disclose the nature and scope of their sponsorships and/or endorsement deals, payments and compensation, nor conduct adequate (if any) due diligence.”
Trevor Lawrence, the first overall NFL draft pick in 2021, signed an endorsement deal with FTX, receiving a $500,000 payment in cryptocurrency. Kevin Paffrath, known as a "landlord influencer," promoted FTX on his YouTube channel, "Meet Kevin," for which he allegedly received $2,500 for each mention of the platform.
Lawyers representing the endorsers argue that the advertisements did not encourage users to deposit money into FTX accounts. They also maintain that the endorsers had no involvement in the alleged "FTX’s misappropriation and mismanagement."
AfterFTX's collapse in November 2022, Paffrath and Nash removed their FTX endorsements from their YouTube channels and issued apologies.
The resolution of this lawsuit involving Trevor Lawrence, Kevin Paffrath, and Tom Nash is a significant development in the ongoing legal battle surrounding FTX and its celebrity endorsements. As other high-profile cases continue, the cryptocurrency industry is under an increasing amount of scrutiny regarding endorsements and the responsibility of endorsers in the crypto space.
FTX Granted Permission to Liquidate Crypto Holdingsto Settle Debt
Last week, the Finance Magnates reported that the U.S. Bankruptcy Court for the District of Delaware has authorized cryptocurrency exchange FTX to liquidate, invest, and hedge its crypto assets, valued at over $3.4 billion, in order to settle outstanding debts.
This decision follows FTX's request to engage in the sale of digital assets, emphasizing the benefits of hedging and generating returns for creditors.
Judge John Dorsey presided over the court hearing, approving the motion and overruling objections from two opposing parties. To address concerns raised by the U.S. Trustee, FTX amended its proposal, opting not to issue advance public notices of transactions to avoid market impact.
They will privately inform the U.S. Trustee and creditors' committees, ensuring transparency in the process. FTX aims to settle opponents as the proposal undergoes consideration by Judge John Dorsey in a Delaware courtroom.This article was written by Tareq Sikder at www.financemagnates.com.
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