A federal judge has decided not to dismiss a lawsuit against several high-profile celebrities, including sports stars Tom Brady, Stephen Curry, and Shohei Ohtani. The lawsuit claims that these celebrities misled investors while promoting the now-collapsed cryptocurrency exchange, FTX.
The investors allege that the celebrities ignored warning signs and concealed large payments they received for endorsing FTX as brand ambassadors. They argue that this was part of a conspiracy with FTX founder Sam Bankman-Fried to defraud them into using the exchange.
In a ruling issued on Wednesday, U.S. District Judge K. Michael Moore in Miami dismissed 12 out of the 14 claims made by the investors. He stated that the investors failed to show the celebrities were aware that FTX was fraudulent. Simply receiving payments for promotions does not automatically imply involvement in a conspiracy, according to the judge.
However, the judge did allow some claims to proceed. He noted that the investors might be able to prove that the celebrities violated Florida law by aiding FTX in selling unregistered securities. A claim based on Oklahoma law also survived the judge’s scrutiny.
The lawsuit also names other celebrities, including baseball player David Ortiz, tennis star Naomi Osaka, supermodel Gisele Bundchen, comedian Larry David, and businessman Kevin O’Leary, as well as the Golden State Warriors basketball team. Lawyers representing the celebrities did not respond to requests for comments following the ruling.
Adam Moskowitz, the attorney for the investors, expressed optimism about the decision. He highlighted that Florida law could hold the defendants strictly liable, meaning they could be responsible even without knowing FTX was a fraud. Moskowitz plans to file an amended complaint that may include additional defendants, such as Major League Baseball and Formula 1 Racing. Notably, sports figures Shaquille O’Neal and Trevor Lawrence have already reached settlements in this matter.
FTX filed for bankruptcy in November 2022. Bankman-Fried is currently appealing his fraud conviction and a 25-year prison sentence. Last October, FTX received court approval for a bankruptcy plan aimed at repaying customers fully.
This case is known as In re FTX Cryptocurrency Exchange Collapse Litigation and is being heard in the U.S. District Court for the Southern District of Florida.