FTX’s spectacular collapse in November 2022 resulted in billions of dollars in losses for investors worldwide and triggered criminal charges against its founder, Sam Bankman-Fried, who is currently serving a lengthy prison sentence for fraud. In the wake of this collapse, a group of investors filed suit, alleging that celebrity endorsers and influencers materially contributed to the fraud by promoting FTX without disclosing their financial relationships or the risks involved. The plaintiffs contended that these endorsements helped market unregistered securities and misled the public, thereby facilitating the scheme.
The multidistrict litigation targeted a wide array of celebrity endorsers (Stephen Curry, Larry David, Tom Brady, Gisele Bündchen, Kevin O’Leary, Udonis Haslem, David Ortiz, Golden State Warriors, LLC, Shohei Ohtani and Naomi Osaka) and social media influencers (Jaspreet Singh, Erika Kullberg and Creators Agency, LLC.). The investors said the Defendants ignored “red flags” in their efforts to promote FTX as “brand ambassadors,” as part of a civil conspiracy with Bankman-Fried’s exchange to defraud them into becoming customers.
The celebrity defendants, who received substantial payments – Tom Brady reportedly earned $30 million in now-worthless stock, and Gisele Bündchen $18 million – were also accused of failing to perform due diligence and of misleading investors through their endorsements.
In a 49-page decision on May 7, 2025, U.S. District Judge K. Michael Moore of the Southern District of Florida dismissed 12 of the 14 claims in the lawsuit.
Three counts in the complaint alleged claims under Consumer Protection laws of various states. Defendants argued that the consumer protection laws preclude coverage of claims where the predicate acts are securities transactions. The court agreed. However, in connection with the securities claims that were asserted in the lawsuit, Defendants reserved the right to dispute that FTX’s products constitute securities. The court therefore ruled that it would be premature for the court to dismiss the consumer protection claims on the grounds that they are predicated on the sale of securities, when there were factual disputes about what products Defendants were promoting, whether they were securities, and accordingly, whether Defendants’ conduct is regulated by securities law. But the court did dismiss these claims because Plaintiffs failed to allege facts “as to time, place, and substance of [Defendants’] alleged fraud.”
Two counts in the complaint alleged that Defendants conspired with FTX to induce Plaintiffs to purchase interests in FTX. These claims require that Plaintiffs allege with particularity an unlawful agreement between Defendants and the FTX entities. The court explained that Defendants cannot be found liable for civil conspiracy for merely receiving payments and other monetary benefits in exchange for their promotional content. These counts were dismissed because Plaintiffs failed to detail the required “who, what, where, when, and how” of the alleged conspiracy.
Five counts in the complaint were for aiding and abetting in fraud and in conversion. One element of these claims is “actual knowledge” of the fraud and conversion. Plaintiffs referred to “red flags” that Plaintiffs should have seen. The court was not convinced, saying that “allegations of negligence, recklessness, or even that Defendants ‘look like idiots,’ are insufficient to establish that Defendants had actual knowledge of FTX’s fraud and conversion.” These claims were therefore dismissed.
For similar reasons, the court dismissed the claim for securities fraud under California law. The court said that, while there were actions that demonstrated “that Defendants were uninformed, negligent, or even reckless, it does not demonstrate that Defendants had any knowledge of FTX’s fraud, nor that they had the requisite intent to deceive or defraud investors.”
As to the claim for declaratory judgment, that is always in the discretion of the court. Judge Moore ruled that a declaratory judgment would not serve a useful purpose here and therefore dismissed it.
Of the 14 claims, two did survive – both for securities law violations under state law. The court explained that, in order to state a claim under Florida’s statute, Plaintiffs must allege that: (1) the FTX products were securities; (2) the securities were not registered; and (3) Defendants participated or aided in the sales as partners or agents of or for FTX. The court held that Plaintiffs plausibly alleged that the FTX products were securities, and Defendants did not refute that the alleged securities were not registered. The court then turned to whether Defendants participated or aided in the sale as partners or agents of or for FTX.
According to the court, Plaintiffs plausibly asserted that each Defendant entered into an agreement with FTX to promote its platform in exchange for a substantial compensation package. As examples, Kevin O’Leary was allegedly given an equity stake in FTX and Shohei Ohtani was given a substantial compensation package in equity and cryptocurrencies to serve as a global ambassador for the company. As to the issue of whether the facts established an “agency” relationship, the court held there was a factual dispute on this issue, which was sufficient to get past the motion to dismiss stage. The court therefore denied the motion to dismiss this claim.
The court allowed a comparable claim under Oklahoma securities law to proceed. Like Florida, Oklahoma’s securities laws provide for liability where promoters assist in the sale of unregistered securities, regardless of their knowledge or intent. The court found that the plaintiffs’ allegations met the plausibility standard to proceed with this claim, as the celebrity endorsements arguably facilitated the sale of unregistered securities in Oklahoma.
This decision has significant implications for the legal landscape of celebrity endorsements and cryptocurrency. It highlights the challenges in holding public figures accountable for their promotional activities, especially when there is no direct evidence of their knowledge of fraudulent schemes. At the same time, the ruling serves as a cautionary tale for influencers and public figures about the potential legal ramifications of their endorsements.
The dismissal of the majority of the claims against the celebrity defendants is a notable partial victory for these public figures, but the surviving claims indicate that the legal battle is far from over. Furthermore, the dismissals were all without prejudice, meaning that Plaintiffs can amend their complaint — they’ll just need to bring more robust evidence if they do.
