The collapse of FTX, a cryptocurrency exchange, and the ensuing charges against its founders have brought “trustworthy public figures” like Stephen Curry and Tom Brady into the spotlight, in ways they don’t want. They could become witnesses in litigation battles and possibly face liability for their involvement, according to reports.
The Securities and Exchange Commission (SEC) has charged Alameda Research CEO Caroline Ellison and former FTX chief technology officer Gary Wang with defrauding FTX investors. Both have agreed to cooperate with federal authorities in the prosecution of FTX founder Sam Bankman-Fried.
Tom Brady, Shaq, Gisele Bündchen, Steph Curry and Larry David are amongst the celebrities named in a class action lawsuit involving Sam Bankman-Fried and the demise of FTX. pic.twitter.com/tcGMDpzxqB
— Yahoo Finance (@YahooFinance) November 30, 2022
Lips Loosed. Tea Spilled.
That means both Ellison and Wang will be spilling all the tea about every email, meeting, discussion had about FTX and how funds were transferred, stolen, etc. It also means, discussions about how and why they chose the celebrity endorsers they did and what the ultimate goal was.
Curry, Brady and others could be called as witnesses in a trial. What evidence will be uncovered when Ellison and Wang start singing their songs?
Cryptocurrency was met with much skepticism from the established financial set. Warren Buffet’s investment partner at Berkshire Hathaway, Charlie Munger, offered a scathing critique in 2021.
“I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air,” Charlie Munger said.
The former head of the SEC Office of Internet Enforcement, John Reed Stark, wrote an op-ed for the New York Times arguing that celebrity crypto endorsers should face real legal scrutiny now that FTX is bankrupt and billions of dollars are missing.
But as is usually the case when there is an instance of financial fraud involving a mass sum of money, which segment of the population is the most impacted?
“Last year, a University of Chicago study found that 44 percent of Americans who owned and were trading crypto were people of color. To make matters worse, a J.P. Morgan Chase study released this month found that people with lower incomes very likely made their crypto purchases when prices were elevated when compared to higher earners and have therefore suffered disproportionately,” wrote John Reed Stark, the former head of the SEC Office of Internet Enforcement.
As I write in today's @nytimes, the SEC and DOJ have got crypto-touting celebrities squarely in their sights. Per FTX promoter/NBA legend @SHAQ, "A lot of people think I'm involved, but I was just a paid spokesperson for a commercial." Nice defense Shaq. https://t.co/zN2pSqxPQi
— John Reed Stark (@JohnReedStark) December 18, 2022
In an ad with NBA legend Shaquille O’Neal narrating, Curry tells us we don’t need to be experts in cryptocurrency. This new form of money that’s making people rich.
Finally, an opportunity to democratize investing and give regular people a chance to make millions like the elite do in the stock market.
Who is more trustworthy than Curry? We know him, like him. He’s a good dude, family man, has cute kids and a wife on Instagram. What could go wrong?
Want to learn more about crypto? As the world’s leading crypto expert, @stephencurry30 has got you covered…or does he?
— FTX (@FTX_Official) March 29, 2022
This is exactly what Bankman-Fried, Wang and others at FTX banked on. The public’s general love and trust of famous celebrities.
What role did Curry and Brady have in the overall workings of FTX? It’s doubtful they were conspirators and active conspirators in the defrauding of investors. But they did play a role in the legitimization of FTX and cryptocurrency.
How will they answer for that? Time will tell.