Former compliance chief of FTX, Daniel Friedberg, has provided evidence to support a class action lawsuit against celebrities who allegedly promoted the now-defunct cryptocurrency exchange. Friedberg’s cooperation could potentially refute a key defense made by some of the defendants, who claimed that the Miami court has no jurisdiction over the case and that the claims have no association with Florida.
The proposed amended complaint, filed in a Florida District Court on May 11 by class action lawyers, alleged that promotional activity for FTX originated from Florida. Friedberg, who was the chief regulatory officer at FTX and the chief compliance officer of FTX US, the exchange’s United States arm, testified in sworn statements that FTX US’ vice president of business development, Avinash “Avi” Dabir, was based in Miami and was in charge of brand ambassadors for FTX, including the defendants in the case.
FTX Bankruptcy and the Need for Transparency in Celebrity Endorsements
The lawsuit accuses celebrities such as former basketball player Shaquille O’Neal, comedian Larry David, retired NFL player Tom Brady, and FTX founder Sam Bankman-Fried of promoting FTX without disclosing that they were being paid for their endorsements. The plaintiffs in the case claim that the celebrity promotions misled investors, leading to significant losses when the exchange collapsed.
The case has raised questions about the ethical implications of celebrity endorsements in the cryptocurrency industry. While endorsements from famous personalities can help raise awareness of digital assets, they can also be misleading and pose significant risks for investors who may not fully understand the underlying technology or the risks involved.
In November 2022, FTX went bankrupt, and the collapse was attributed to mismanagement and regulatory issues, including concerns that the exchange had failed to register with the US Commodity Futures Trading Commission. Prior to its collapse, FTX was one of the fastest-growing cryptocurrency exchanges.
The fallout from the FTX collapse has also prompted calls for greater regulation of the cryptocurrency industry to protect investors from fraudulent activities and promote transparency.
The cooperation of Daniel Friedberg in the class action lawsuit against celebrity promoters of FTX could potentially strengthen the case against them and bring to light the importance of transparency and disclosure in celebrity endorsements. The lawsuit highlights the need for greater scrutiny and regulation of the cryptocurrency industry to protect investors from fraudulent activities and ensure greater transparency in the market.
