FTX customers sue influencers who promoted failed cryptocurrency for $1 billion
FTX suffered the equivalent of a bank run in November when investors simultaneously lost faith in the company and attempted to withdraw their stakes, leaving the firm unable to fully remunerate them.
A group of influencers who promoted failed cryptocurrency FTX face a $1 billion class action suit alleging that they failed to disclose the nature of their sponsorship agreements with the firm when advertising it.
Plaintiffs alleged that "defendants did not disclose the nature and scope of their sponsorships and/or endorsement deals, payments and compensation, nor conduct adequate (if any) due diligence," according to Fortune.
The suit names several YouTubers, among them Graham Stephan, Andrei Jikh, Jaspreet Singh, Brian Jung, Jeremy Lefebvre, Tom Nash, Ben Armstrong, and Kevin Paffrath.
The suit names seven plaintiffs, each of whom invested in FTX Yield Bearing Accounts. Those litigants alleged that the influencers helped to promote the crypto, inflating the value of the digital currency beyond levels it would have naturally reached. They further allege that these influencers received clandestine payments from the firm that went undisclosed.
FTX collapsed in November when investors simultaneously lost faith in the company and attempted to withdraw their stakes, leaving the firm unable to fully remunerate them.
Bahamian authorities subsequently arrested FTX founder Sam Bankman-Fried and extradited him to the U.S. to face charges. He has pleaded not guilty to fraud, conspiracy, money-laundering, and campaign finance law violations.
Both FTX co-founder Gary Wang and former Alameda CEO Caroline Ellison have pleaded guilty and are cooperating with prosecutors.
Ben Whedon is an editor and reporter for Just the News. Follow him on Twitter.