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FTX Investors Settle with Bankman-Fried, Target Celebrity Promoters Next

FTX Investors Settle with Bankman-Fried, Target Celebrity Promoters Next

Apr 22, 2024

FTX Investors Settle with Bankman-Fried, Target Celebrity Promoters Next

A group of investors and customers of the defunct cryptocurrency exchange FTX has reached a settlement with co-founder Sam Bankman-Fried. If approved by a judge, the agreement would release Bankman-Fried from civil liability, following his recent 25-year prison sentence for fraud connected to FTX's collapse.

Under the terms of the proposed settlement, filed in federal court in Miami, Bankman-Fried would aid the plaintiffs in pursuing claims against celebrities and other individuals who endorsed FTX. This includes providing documents and testimony that could assist the litigation against these promoters. The agreement also stipulates that Bankman-Fried will disclose financial information, including his investment in the AI startup Anthropic and his net worth, which he has certified as negative.

The settlement, valued at approximately $1.3 million, involves Bankman-Fried forfeiting his defense in the multi-district litigation in exchange for his cooperation. The class action lawsuit initially targeted several financiers and celebrities such as Tom Brady, Shaquille O'Neal, and Gisele Bundchen, accusing them of promoting FTX's unregistered securities and contributing to a Ponzi scheme. The plaintiffs assert that with Bankman-Fried's cooperation, they stand to gain significantly more than they are conceding.

Jacksonville Jaguars quarterback Trevor Lawrence, who received a $500,000 payment to endorse FTX, has also reached a settlement with the plaintiffs. According to Lawrence's lawyer, David A. Rothstein, there is no immediate comment regarding the settlement. A lawyer representing Bundchen, O'Neal, and Brady has not responded to requests for comment.

Mark Botnick, a spokesman for Bankman-Fried, has stated that the former FTX head is dedicated to returning assets to customers and is looking forward to working with the plaintiffs' legal team to achieve this goal.

The plaintiffs' attorneys have asked the judge to approve the settlement, emphasizing the value of Bankman-Fried's cooperation in the ongoing litigation. The agreement comes after Bankman-Fried’s conviction at trial last year, where prosecutors presented evidence of him misappropriating FTX customer funds for various personal expenditures.

Bankman-Fried's former colleagues, Caroline Ellison, Nishad Singh, and Gary Wang, along with FTX lawyer Dan Friedberg, have made similar settlement agreements with the plaintiffs. Meanwhile, several smaller promoters have contributed to a fund to support the lawsuit.

The outcome of the settlement remains contingent on judicial approval. Bankman-Fried is currently in custody at the Metropolitan Detention Center in Brooklyn, New York, and plans to appeal his sentence and conviction. The civil litigation, known as the FTX Cryptocurrency Exchange Collapse Litigation, continues in the US District Court for the Southern District of Florida in Miami.

Settlement Agreement

Bloomberg Article

CoinDesk Article


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