FTX investors suing the cryptocurrency exchange¡¯s celebrity promoters for allegedly helping to facilitate an $11 billion fraud have some new targets, including Major League Baseball, Formula One racing and Mercedes-Benz Group¡¯s racing team.
Investors¡¯ lawyers sued MLB ¡ª the first major sports league to sign a promotional deal with FTX in 2021 ¡ª and the other entities in U.S. federal court in Miami on Monday, accusing them of ¡°aiding and abetting and/or actively participating in the FTX Group¡¯s massive, multi-billion-dollar global fraud.¡± At one point, MLB umpires wore FTX patches on their sleeves.
FTX investors who say they lost at least $11 billion in the exchange¡¯s meltdown allege MLB, F1 and the Mercedes F1 racing team helped push the sale of unregulated securities through promotional deals with the cryptocurrency site. Company founder Sam Bankman-Fried was convicted of fraud and conspiracy earlier this month.
The additions broaden a class-action suit, that already includes more than two dozen celebrities who shilled for FTX in TV commercials and other events. They included big names such as ex-NFL star Tom Brady, current American League Most Valuable Player Shohei Ohtani and NBA sharpshooter Steph Curry.
Representatives of the two leagues, along with the racing unit of Stuttgart, Germany-based Mercedes, didn¡¯t immediately return calls and emails for comment.
The lawsuit alleges celebrity endorsers and firms that provided financial and legal services to FTX turned a blind eye to red flags about the business and sought to cash-in on the public enthusiasm for the alternate currency.
¡°MLB and many others were quick to jump into the crypto world with both feet when they saw the potential for fast money,¡± investors¡¯ lawyers said in one of the suits. The investors filed three separate complaints Monday, which were consolidated into the class-action case.
The celebrity endorsers have argued in court filings that the investors¡¯ claims are meritless because the advertisements and sponsorships didn¡¯t specifically encourage anyone to deposit money in FTX accounts.
The endorsers also contend they played no role in the losses stemming from ¡°FTX¡¯s misappropriation and mismanagement¡± of investors¡¯ funds. Prosecutors accused Bankman-Fried of shifting customer money to Alameda Research, a hedge fund affiliated with FTX, for risky investments and political donations.
MLB officials, who signed a five-year promotional deal with FTX in 2021, canceled it the next year after the cryptocurrency site collapsed. FTX, which filed for Chapter 11 protection in Delaware, is being overseen by a trustee seeking to recoup money for victims of the fraud.
The Mercedes Formula 1 team also nixed its promotional deal with FTX in 2022, removing the exchange¡¯s logos from its cars. Mercedes had signed the FTX sponsorship deal in September 2021.
?2023 Bloomberg L.P.
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