The FTX fiasco has led to several lawsuits being filed. A new class action lawsuit was filed against YouTubers promoting FTX. The complaint also asks for $1 billion in compensation for the Youtubers connection to the defunct FTX cryptocurrency trading platform. Following earlier lawsuits, this one was brought against well-known people who promoted the Bitcoin exchange before its bankruptcy in November last year. In the brief but exciting history of the digital asset market, the FTX meltdown may be the biggest scandal yet. An established name in the cryptocurrency industry once. But unfortunately, 2022 ended with a string of fraud incidents coming to light.
A class action lawsuit has been filed against the financial influencers, alleging that they were paid “handsomely” to promote the FTX brand before its demise. This complaint follows others filed against celebrity endorsers like Tom Brady, Madonna, and Gwenyth Paltrow.
FTX went bankrupt last year
In October 2022, FTX went bankrupt over 10 days with its CEO, commonly known as SBF, accused of setting up a years-long fraud in which he used billions of dollars in customer funds for personal expenses and high-risk bets through the exchange’s sister trading house, Alameda Research. In January, he entered a not-guilty plea to the accusations. SBF is currently under house arrest pending his October trial.
Since then, Erika Kullberg, BitBoy Ben Armstrong, and “Meet Kevin” Kevin Paffrath have all been sued. There is no deadline for depositors to receive their money back; it needs to be clarified how much consumers lost in the FTX scandal. Some estimate the loss to be approximately $8 billion. They are pursuing those who they believe have misled them in the interim. The influencer’s support for the platform’s exchange is the main focus of the complaint. Furthermore, it asserts that no payment or remuneration was disclosed while recommending the product.
For the plaintiffs side, Adam Moskowitz of the Moskowitz Law Firm is arguing. On the other hand, Moskowitz is also taking similar legal action against Tom Brady and other famous people. Several well-known figures enthusiastically promoted the long-gone cryptocurrency exchange.
On March 15, a class action lawsuit was submitted to the Miami division of the United States District Court. It lists seven litigants who bought FTX Yield Bearing Accounts from the US, Canada, the UK, and Australia.
Paffrath stated that SBF is the “most obvious criminal”
According to their lawsuit, the defendants “did not disclose the nature and breadth of their sponsorships and/or endorsement relationships, payments and compensation, nor undertake proper due diligence” when they sued eight YouTubers, an influencer agency, and the agency’s founder for their losses.
According to the document, influencers had a “major role” in the FTX controversy and without their support and “hype,” the cryptocurrency platform would not have reached such heights.
Some of the defendants listed in the case have adamantly denied ever accepting anything for their favourable reviews of the business at the time.
Some have said they have yet to provide individualised financial advice to disassociate themselves from the corporation and its problems. Kevin Paffrath, who has 1.87 million YouTube subscribers for his channel “Meet Kevin,” is one of the defendants.
In a video titled “Being Sued,” which he put to his platform on Friday, Paffrath directly addressed the accusations. He stated in the video that SBF is the “most obvious criminal” and that he feels “so terribly” bad for anyone who lost money in FTX.
The self-described financial analyst asked a hypothetical question: If he were a real estate agent and had a call from a potential house buyer, he could put them in touch with another agent who eventually sold them a home. That house could then fall into a sinkhole—drastically reducing its value—but would he be liable as the first point of contact? He further asked: “What role, if any, do promoters play?”
“It’s like a spectrum, who’s responsible?” Paffrath asks. “The more we go away from who’s truly responsible the less responsibility there really seems to be.” The FTX collapse was immense damage to the cryptocurrency industry. Additionally, many firms that invested money in the firm declared bankruptcy.