A class action lawsuit has been brought by FTX investors against the platform’s founder and former CEO as well as a number of well-known figures who supported it.
The class action, which was filed on Tuesday evening in Miami, asserts that Sam Bankman-Fried, NFL player Tom Brady, and comedian Larry David deceived clients and used dishonest business practices to promote the sale of FTX yield-bearing digital currency accounts.
Yield Bearing Accounts Had “Unregistered Securities”
Additionally, the lawsuit claims that the exchange’s yield-bearing accounts contained unregistered securities. In order to “induce confidence and to drive consumers to invest in what was ultimately a Ponzi scheme.” The defendants, according to the lawsuit, made “misrepresentations and omissions.”
The complainant claims that because the celebrities he named “promoted, assisted in, and actively participated” in the alleged scam, they are equally accountable.
The list of famous people includes Naomi Osaka, David Ortiz, Shaquille O’Neal, Udonis Haslem, Kevin O’Leary, and the Golden State Warriors.
After a week of rumors over the company’s health, FTX disclosed late last week that it had filed for Chapter 11 bankruptcy in Delaware. Notably, FTX US was also involved in the proceedings, despite the former CEO’s assertions that their US exchange was operating normally.
According to reports, FTX loaned up to $10 billion in customer money to finance dangerous wagers made by its linked trading company, Alameda Research. FTX has lent more than half of its customer cash, which totaled $16 billion in total customer assets.
Congress to Handle FTX Case
The collapse of FTX will be the subject of a hearing, the US House Financial Services Committee said most recently. They invited all the organizations and people engaged, including Sam Bankman-Fried, the creator of FTX, Alameda Research, Binance, and others, to take part.
In addition to retail traders, a number of well-known cryptocurrency businesses have also suffered as a result of FTX’s demise. The FTX epidemic has spread to BlockFi, Genesis, and Gemini during the past week.
According to the most recent sources, cryptocurrency lender BlockFi is getting ready to declare bankruptcy, while Genesis said yesterday that it was stopping new loans and redemptions on its lending product.
The recent controversy surrounding FTX, meanwhile, has prepared the ground for one of the worst crypto price drops in the previous year. Over the past week, the leading cryptocurrency has been trading at a level not seen in two years, near the $16,000 level. Furthermore, during the last ten days, the overall cryptocurrency market has decreased by at least 20%.
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