Tom Brady & Gisele Bündchen Have Been Sued for Defrauding Crypto Investors—Everything We Know About the FTX Collapse
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What do Tom Brady, Gisele Bündchen and Larry David have in common? They’re all being sued for defrauding investors after the collapse of FTX, one of the world’s largest cryptocurrency exchanges headed up by CEO Sam Bankman-Fried. It begs the question of what Tom Brady’s FTX investments were and how much trouble he and his ex-wife could be in if they’re found liable.
If you know nothing about crypto but watched 2022’s Superbowl commercials, you might be familiar with at least the letters FTX. The company hired Curb Your Enthusiasm’s Larry David to pitch crypto to potential investors as a sort of anti-spokesperson, admitting he knew nothing about digital currency. The commercial closes with David rejecting FTX, with a voice-over warning that said: “Don’t be like Larry. Don’t miss out on the next big thing.” In another commercial from 2021, Brady and Bündchen (still a couple at this point) call their friends to ask if “they’re in” on crypto. Here’s everything we know about Tom Brady’s FTX investments and the other celebrities embroiled in the company’s potentially shady operations.
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Tom Brady’s FTX Investment
Tom Brady’s FTX investment began when he and his wife, Gisele Bündchen, bought an undisclosed equity stake in FTX in June 2021. “It’s an incredibly exciting time in the crypto-world and Sam and the revolutionary FTX team continue to open my eyes to the endless possibilities,” Brady said in a press release at the time. “This particular opportunity showed us the importance of educating people about the power of crypto while simultaneously giving back to our communities and planet. We have the chance to create something really special here, and I can’t wait to see what we’re able to do together.”
Bündchen added: “It was fascinating getting to know more about the crypto universe! Cryptocurrency will become more and more familiar to all of us as time goes on. What attracted me most about this partnership was the potential to apply resources to help regenerate the Earth, and enable people to lead better lives, therefore generating real transformation in our society.”
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This announcement of their partnership was followed by a commercial for the exchange in September 2021. In the advertisement, both he and Bündchen call all their friends to ask if “they’re in” on crypto. “I’m getting into crypto with FTX, you in?” Brady tells a friend over the phone.
In 2021 and 2022, FTX and its CEO Sam Bankman-Fried were the toast of the crypto industry. The Bahamas-based exchange was one of the biggest in the world, having been founded just three years prior in 2019 by Bankman-Fried, then 28 years old. At its peak in 2021, it had more than one million users and revenue of over $1 billion, making it the third-largest exchange by volume. But after news broke on November 3 that FTX could be facing a liquidity crisis, investors scrambled to withdraw their holdings, demanding withdrawals worth $6 billion. FTX promptly froze all accounts. On Friday, November 11, 2022, Bankman-Fried stood down as CEO and the company filed for bankruptcy with potentially more than one million creditors in the lurch.
This declaration sent shockwaves through an industry that has been struggling to grasp mainstream appeal and credibility, sparking government investigations and unearthing potential criminal charges. It’s particularly shocking given that Bankman-Fried was regarded as a prodigy in crypto. He’d become one of the richest people in the world by the time he turned 30 with an estimated fortune of $24 billion. “Here we are, with one of the richest people in the world, his net worth dropping to zero, his business dropping to zero,” said Jared Ellias, a bankruptcy professor at Harvard Law School, per the New York Times. “The velocity of this failure is just unbelievable.” It’s estimated FTX could owe money to more than one million people and organizations, according to bankruptcy documents filed in court.
In a class-action lawsuit filed in Florida, Brady, Bündchen, David and other celebrities make up a list of those accused of defrauding investors who lost money after FTX’s sudden collapse. It alleges FTX used famous faces to tout the exchange and coax naïve investors into “a Ponzi scheme”. Other celebrities include NBA star Stephen Curry; Jacksonville Jaguars quarterback Trevor Lawrence; baseball player Shohei Ohtani; tennis champion Naomi Osaka; and broadcaster and former basketball player Shaquille O’Neal. Kevin O’Leary, a host of Shark Tank is also named in the complaint, which was filed on November 15 in the Southern District of Florida. The lawsuit alleges that these sports and TV celebrities brought instant credibility to FTX, and should be held just as culpable as its disgraced now former-CEO Bankman-Fried. Per Reuters, the suit also claims that FTX’s yield-bearing accounts represent unregistered securities under federal and Florida law.
“Part of the scheme employed by the FTX Entities involved utilizing some of the biggest names in sports and entertainment—like these Defendants—to raise funds and drive American consumers to invest…pouring billions of dollars into the deceptive FTX platform to keep the whole scheme afloat,” the lawsuit claims,” per the Associated Press. “The Deceptive FTX Platform maintained by the FTX Entities was truly a house of cards, where the FTX Entities shuffled customer funds between their opaque affiliated entities, using new investor funds obtained through investments in the [yield-bearing accounts] and loans to pay interest to the old ones and to attempt to maintain the appearance of liquidity,” the lawsuit alleges.
In an email to CBS News, Adam Moskowitz, the attorney leading the class action alleged: “FTX were geniuses at public relations and marketing and knew that such a massive Ponzi scheme—larger than the Madoff scheme—could only be successful with the help and promotion of the most famous, respected, and beloved celebrities and influencers in the world.”
From the information provided in the lawsuit alone, it’s unclear precisely what the financial relationship was between FTX and these celebrity endorsers. Still, experts warn that being a spokesperson for crypto carries more weight and implications than, say, sports drinks. “Selling an asset that is a financial instrument … is not the same thing as selling sneakers,” Charles Whitehead, professor at Cornell Law School, who is not involved in the case, told CNN Business. “There are anti-fraud and consumer-protection rules for selling bad sneakers. There are more restrictive rules when you’re talking about selling financial assets. All these celebrities who are running around and doing these sorts of sponsorships should stop and ask a securities lawyer.”
They certainly aren’t the only celebrities who’ve fallen into hot water over their promotion of crypto. In October 2022, Kim Kardashian was ordered to pay $1.26 million in penalties, disgorgement, and interest for unlawfully promoting crypto assets offered and sold by EthereumMax, without disclosing the fact that she’d been paid to do so. “The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, in a press release at the time. “Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
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