Will Larry David go to jail for the U.S. FTX scandal?
If you were active on social media at all during the last two years, you will have surely heard about cryptocurrency. If there’s one detail that sticks out in the whole conversation, it’s that traditional financial institutions clearly do not like it. However, as their positions of power within global economics became threatened by cryptocurrency’s rise, bad actors within cryptocurrency itself are ruining it for everyone.
FTX is the latest cryptocurrency business to file for bankruptcy while under fire for a lawsuit claiming billions in damages. Let’s take a closer look at what’s going on.
The lawsuit
From what we know so far, the suit seeks unspecified damages and is the first filed against Bankman-Fried and his companies since the U.S. FTX company filed for bankruptcy protection.
Adam Moskowitz, the attorney leading the class action, said in an email that he is still trying to wrap his head around how such a thing could happen. “It is still very difficult to comprehend that just one company defrauded more than $11 billion dollars from consumers, all from our backyard here in Miami.”
Oklahoma resident Edwin Garrison purchased a yield-bearing account from FTX, and now seeks to represent a class of “thousands, if not millions, of consumers nationwide” who were allegedly defrauded by the company. His official complaint was filed on November 15 in Florida federal district court.
The lawsuit depicts a platform shaky from the start. “The deceptive FTX Platform maintained by the FTX Entities was truly a house of cards, where the FTX Entities shuffled customer funds between their opaque affiliated entities, using new investor funds obtained through investments in the [yield-bearing accounts] and loans to pay interest to the old ones and to attempt to maintain the appearance of liquidity.”
“Part of the scheme employed by the FTX Entities involved utilizing some of the biggest names in sports and entertainment — like these Defendants — to raise funds and drive American consumers to invest” the lawsuit continued. This is apparently in regard to FTX’s yield-bearing accounts, to which the lawsuit alleges represented unregistered securities under federal and Florida law.
Early endorsements
“Shark Tank” star Kevin O’Leary is a shareholder and a paid spokesperson for FTX. Early in the partnership, he wrote, “To find crypto investments opportunities that met my own rigorous standards of compliance, I entered into this relationship with @FTX_Official,” according to the class action suit.
O’Leary also vouched for Sam Bankman-Fried, saying, “I’m a big advocate for Sam because he has two parents who are compliance lawyers. If there’s ever a place I could be that I’m not gonna get in trouble, it’s going to be in FTX.”
In the world of sports, Steph Curry is a basketball superstar and one of many athletes who went up for FTX. “I’m not an expert, and I don’t need to be. With FTX I have everything I need to buy, sell, and trade crypto safely,” Curry said in a commercial earlier this year. “I’m excited to partner with a company that demystifies the crypto space and eliminates the intimidation factor for first-time users.”
As more details of the lawsuit come to light, many of the celebrity backers have yet to speak out on where they stand. While some celebrity endorsements are widely considered to be forgettable cash grabs, others who were more vocal appear to be more on the hook. Larry David may yet be one such celebrity. One of the most viral advertisements from FTX features David in a comedic video roasting the company.
The lawsuit focuses on that video in particular. “The ad — the only Super Bowl commercial David ever appeared in — featured David being a skeptic on such historically important inventions as the wheel, the fork, the toilet, democracy, the light bulb, the dishwasher, the Sony Walkman, and, of course, FTX, and cautioned viewers, ‘Don’t be like Larry,’” the lawsuit alleges.
The future
For many people worldwide, cryptocurrency was believed to be the answer to global finance finally becoming for the people instead of the powerful. However, the FTX lawsuit is shaping up to be yet another snapshot of the serious state of cryptocurrency.
How do you think the upcoming FTX ruling may affect cryptocurrency? Let us know in the comments!
