Investors Drop Claims Against Bankrupt Crypto Firm FTX in Exchange for Cooperation in Lawsuits Against Promoters

Investors Drop Claims Against Bankrupt Crypto Firm FTX in Exchange for Cooperation in Lawsuits Against Promoters

Investors in the bankrupt cryptocurrency firm FTX have agreed to drop their claims against Sam Bankman-Fried, the convicted fraudster and former CEO of the company. In return, Bankman-Fried has agreed to cooperate in lawsuits against other defendants, including celebrities Tom Brady, Gisele Bundchen, and Larry David, who promoted FTX before its collapse.

The settlement, filed by a group of FTX investors in Miami federal court, states that Bankman-Fried will be relieved of any civil liabilities from the ongoing multi-district litigation. However, the settlement still requires approval from a judge. As part of the proposed agreement, Bankman-Fried has agreed to provide all nonprivileged documents related to his assets, his investment in Anthropic (an artificial intelligence startup backed by Google and Amazon), an affidavit certifying his negative net worth, and documents concerning other defendants in the lawsuits.

Bankman-Fried has also committed to sharing any information he possesses about the accountants, lawyers, and venture capital firms that were involved with FTX, which collapsed in November 2022 after Bankman-Fried used user funds to cover an $8 billion debt at sister company Alameda Research.

Prominent figures such as NFL legend Tom Brady, his ex-wife Gisele Bundchen, and “Curb Your Enthusiasm” star Larry David, along with Steph Curry, Shaquille O’Neill, and Naomi Osaka, had appeared in advertisements promoting FTX and are currently facing lawsuits brought by shareholders. Additionally, more than a dozen venture capital firms, both domestic and international, are also entangled in litigation related to their involvement with FTX.

The lawsuits filed against the defendants accuse each endorser of promoting FTX’s unregistered securities and luring investors into a Ponzi scheme. Bankman-Fried, 32, was recently sentenced to 25 years in prison for his role in what federal prosecutors have deemed one of the largest financial frauds in US history.

Bankman-Fried’s co-defendants and former FTX insiders, including his ex-girlfriend Caroline Ellison, FTX co-founder Gary Wang, and former company executive Nishad Singh, have also agreed to settle. They have begun providing information to assist the investors. Social media celebrities who promoted FTX, such as finance YouTubers Andrei Jikh, Graham Stephan, Jaspreet Singh, Tom Nash, Brian Jung, and Jeremy Lefebvre, have also settled and agreed to contribute to a common fund of $1.4 million to support the plaintiffs’ lawsuit.

The settlement agreement was signed by Bankman-Fried on April 11, the same day he appealed his conviction and 25-year prison sentence. Defense lawyer Marc Mukasey announced the appeal plans during Bankman-Fried’s sentencing hearing on March 28. The appeal will be made to the Manhattan-based 2nd US Circuit Court of Appeals.

CrimeDoor
Author: CrimeDoor

1 Response

  1. It is disheartening to see investors dropping their claims against Sam Bankman-Fried, especially considering his past as a convicted fraudster. This decision raises questions about the accountability and justice within the cryptocurrency industry. It is crucial for investors to hold individuals accountable for their actions, regardless of their position or reputation. By dropping their claims, it sends a message that fraudulent behavior can be overlooked, which ultimately undermines trust in the industry as a whole. It is important for investors to prioritize transparency and integrity,

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