Judge Dismisses Most Claims Against Celebrities in FTX Lawsuit

TLDRJudge Dismisses Most FTX Lawsuit Claims, State Cases Still Stand.Celebrities cleared in FTX fraud case, and some claims continue.FTX Promo Lawsuit Thrown Out, State Claims Survive.FTX Celeb Endorsers Off the Hook, But Some Legal Battles Remain.Fraud Claims Dropped, State-Level FTX Lawsuit Still Going Strong.A federal judge has sharply limited a major lawsuit filed by investors against celebrities who promoted the FTX cryptocurrency exchange before it collapsed. U.S. District Judge K. Michael Moore, from the Southern District of Florida, dismissed most of the claims in the combined case. He ruled that the investors failed to prove the celebrities knew about any fraud at FTX.The lawsuit FTX filed for bankruptcy in November 2022 alleged that public figures such as Tom Brady, Gisele Bündchen, Stephen Curry, and Kevin O’Leary misled investors by endorsing the exchange. Plaintiffs claimed the celebrities accepted payments to promote FTX while failing to disclose their financial arrangements, violating federal and state laws.Claims of Fraud and Conspiracy DismissedIn his ruling, Judge Moore stated that the plaintiffs failed to demonstrate that the celebrities knowingly participated in fraud committed by FTX founder Sam Bankman-Fried. The court found no adequate evidence indicating the defendants had the required intent to defraud investors or were aware of any underlying misconduct.Additionally, the court dismissed civil conspiracy claims, noting that receiving promotional payments does not constitute a conspiracy. The judge emphasized that negligence or lack of due diligence is insufficient to establish liability for fraud under the legal standards required in this case.Two State-Level Claims Remain ActiveDespite dismissing 12 of the 14 claims, Judge Moore allowed two state-level claims to proceed. The surviving claims are based on allegations that the defendants assisted in the unlawful sale of unregistered securities under Florida and Oklahoma laws. The judge found it plausible that FTX may have used celebrity endorsements as a strategy to market and sell investment products that could be categorized as securities under state law.Florida law imposes strict liability in such cases, meaning the promoters can potentially be held liable even without knowledge of the product’s fraudulent nature. These remaining claims allow the plaintiffs to continue seeking accountability for the celebrities’ role in promoting FTX.Future Legal Action and Ongoing LitigationThe plaintiffs’ legal team, led by attorney Adam Moskowitz, welcomed allowing state claims to proceed. Moskowitz indicated plans to file an amended complaint, which may include additional defendants such as Major League Baseball and Formula 1 Racing.Some individuals previously named in the lawsuit, including Shaquille O’Neal and Trevor Lawrence, have already reached settlements. The exact terms of these agreements have not been disclosed. FTX’s bankruptcy proceedings are ongoing, and the company has received approval for a repayment plan to reimburse its customers.The lawsuit is part of broader legal efforts to determine liability in the promotion and collapse of FTX, which resulted in significant financial losses for investors and heightened scrutiny of cryptocurrency marketing practices. The post Judge Dismisses Most Claims Against Celebrities in FTX Lawsuit appeared first on CoinCentral.