Tom Brady, Gisele Bundchen, Larry David Face Texas Investigation Over FTX Endorsements
“We’re looking closely,” said Joe Rotunda, director of enforcement for the Texas State Securities Commission. Bloomberg News on monday
Rotunda told Bloomberg that celebrity endorsements were not a top priority in the investigation into the FTX collapse, but were part of a broader investigation into potential violations.
The state regulator said earlier this month that it is investigating the royalties they received for praising FTX, which collapsed earlier this month, as well as what kind of disclosures they made.
It is unclear how FTX compensated its various celebrity backers, although in some cases the company is believed to have offered equity stakes in exchange for promoting its brand.
FTX founder Sam Bankman-Fried is seen above. The company’s prominent backers are being investigated by a Texas state regulator for possible violations of security laws
Tom Brady and his ex-wife Gisele Bundchen are among the celebrities who have accepted FTX
NBA star Steph Curry and comedian Larry David also made announcements for the crypto exchange before going public earlier this month.
In other recent developments in the FTX collapse:
State-level investigations into violations of securities laws are more high-profile than investigations by the US Securities and Exchange Commission, but can result in hefty fines.
The SEC is reportedly investigating FTX and the company’s disgraced founder Sam Bankman-Fried, but it’s unclear whether that probe extends to the company’s celebrity backers.
“The SEC does not comment on the existence or non-existence of a possible investigation,” an agency spokesperson told DailyMail.com.
The collapse of FTX, once one of the world’s largest cryptocurrency exchanges, has left approximately one million creditors suffering billions of dollars in losses.
Joe Rotunda, director of enforcement at the Texas State Securities Commission
FTX, which was recently valued at $32 trillion, was backed by a star-studded list of high-profile backers, including some who took stakes in the company.
Last week, A-list celebrities who admitted to FTX were named in a lawsuit seeking $11 trillion in damages.
The lawsuit filed in Florida named Brady, Curry and David, as well as Gisele Bundchen, Shaquille O’Neal, Udonis Haslem, David Ortiz, Trevor Lawrence, Shohei Ohtani, Naomi Osaka and Kevin O’Leary.
Sam Bankman-Fried, the 30-year-old founder of the crypto giant and the celebrities he recruited to endorse the company, says they are responsible for the loss of $11 trillion to American consumers.
Many stars became “ambassadors” for the trading platform, and others were featured in primetime commercials.
The lawsuit, filed by attorney Adam Moskowitz, alleges that they are collectively “liable for billions of dollars in damages to Plaintiff.”
Tom Brady and now ex-wife Gisele Bundchen appeared in an FTX ad last year. The company’s collapse has been named in a class-action lawsuit that claims it has cost consumers $11 trillion.
Steph Curry’s ad told viewers, “I’m not an expert and I don’t need to be, I have everything I need to safely buy, sell and trade crypto with FTX.”
Additionally, lawyers for FTX said on Tuesday that the company has suffered cyber attacks and is missing “significant” assets, after a court filing said the company has a cash balance of $1.24 billion.
Its cash balance as of Sunday was “significantly higher” than expected, Edgar Mosley of Alvarez & Marshal, an advisory firm that advises FTX, said Monday.
He is raising about $400 million in Alameda Research, the crypto-trading firm owned by FTX founder Sam Bankman-Fried, and $172 million in FTX’s Japanese arm.
FTX, which said on Saturday it had launched a strategic review of its global assets and was preparing to sell or reorganize some businesses, had previously said it owed nearly $3.1 billion to its 50 largest creditors.
Reuters reported that Bankman-Fried secretly used $10 trillion in client funds to fuel its trading business, and that at least $1 trillion of those deposits disappeared.
The details of FTX’s cash balances came ahead of a hearing on FTX’s first day of motions in Delaware that began Tuesday.
FTX’s lawyer said at the hearing that the company continues to suffer from cyber attacks as bankruptcy begins, and that “significant” assets are missing.
FTX has asked Judge John Dorsey to sign off on the initial steps in its bankruptcy, including paying employees and critical vendors, which will allow it to continue operating in Chapter 11 bankruptcy proceedings.
FTX, led by new CEO John Ray since the bankruptcy filing, has accused Bankman-Fried of working with Bahamian regulators to “undermine” the US bankruptcy case.
The firm also asked Dorsey to take over a Chapter 15 case filed last week in New York by Bahamian court-appointed liquidators on behalf of FTX’s Bahamas unit. These procedures are used by foreign companies to seek the cooperation of US courts in cross-border bankruptcy cases.
Lawyers representing the Bahamian liquidators, who have previously challenged the validity of the US Chapter 11 proceedings and clashed with the group that is supposed to dominate the case, accepted that request ahead of Tuesday’s hearing.
FTX, led by new CEO John Ray since the bankruptcy filing, has accused Bankman-Fried of working with Bahamian regulators to “undermine” the US bankruptcy case and shift assets overseas.
Bankman-Fried, FTX and the Bahamian liquidators did not immediately respond to requests for comment.
FTX also wants to compensate unidentified individuals for actions they took and continue to take in connection with assets that represent a significant portion of the company’s assets, according to a court filing Tuesday.
Sealed indemnification requests are unusual early in a bankruptcy case. FTX said it was communicating with US regulators and bankruptcy court officials, but did not mention Bahamian regulators.
The company said keeping the details of its compensation claim confidential for now could deter “cyberattacks and other malicious activity”.
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