Since last week, the announcement of FTX’s collapse, previously one of the most valuable cryptocurrency exchanges in the world, has shaken up the world financial markets. Sam Bankman-Fried, the founder of FTX, has been named in an $11 billion proposed class action complaint that asserts fraud and the sale of unregistered securities.
SBF resigned as the company’s CEO after filing for Chapter 11 bankruptcy. However, millions of consumers’ and investors’ money was in danger. The case was filed in Florida Southern District Court by renowned law firms Boies Schiller Flexner LLP and the Moskowitz Law Firm.
The defendants allegedly took part actively in the “offer and sale of unregistered securities in the form of yield-bearing accounts,” according to the lawsuit.
The lawsuit stated that, “FTX’s business was based upon false representations and deceptive conduct. Although many incriminating FTX emails and texts have already been destroyed, we located them and they are evidence of how FTX’s fraudulent scheme was designed to take advantage of unsophisticated investors from across the country.”
In the class-action lawsuit filed against FTX, various Hollywood and sports figures, including Larry David Naomi Osaka, and Tom Brady, have also been named as defendants. The claim is that because of their celeb status, these individuals promoted the company’s failing business strategy.
“Part of the scheme employed by the FTX Entities involved utilising 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 added.
After learning about the company’s loan arrangement with Bankman-Fried-founded cryptocurrency hedge fund Alameda Research, investors reportedly tried to withdraw roughly $6 billion from their accounts on November 6. This is when the collapse of FTX is said to have started. FTX’s demise resulted in the loss of $32 billion in value on November 9, according to reports, and the company suspended customer withdrawals on November 8.