In recent months we have seen a string of lawsuits against companies, owners and now also the celebrities that advertise cryptocurrency and NFT services as well. The two most high-profile examples of this are FTX and Binance. We’re going to take a look at how these sites have ended up being giant trading scams that have cost customers millions of dollars.
FTX
FTX is only the latest in a long line of what turned out to be cryptocurrency Ponzi schemes. In most walks of life you can feel comfort in the fact that if you are using a large company then the chances are it will be fairly low risk but in the crypto world even the worlds biggest sites seem to always turn out being a scam. In FTX’s case, Sam Bankman-Fried wanted to fund his lavish lifestyle buying property, investing in businesses, campaign donations and most notably, paying for celebrity endorsements. When there was a sudden surge of withdrawls from FTX it was discovered that there was an $8bn black hole where money had vanished (in to Bankman-Fried’s pockets). On November 2nd 2023 Sam Bankman-Fried was found guilty of fraud but the story didn’t end there, angry users who have lost life savings are determined to get their money back and are now targeting the very celebrities that were used to try and encourage people to use the site in the first place.
Celebrities such as Tom Brady, Naomi Osaka, Gisele Bundchen and NBA star Stephen Curry are now just some of the names being sued in a class action lawsuit for appearing in marketing campaigns to encourage people to invest in FTX. The company saw huge increases in investment on the back of payments to these stars and their agents.
Binance
The situation with Binance is slightly different to that of FTX, it isn’t so much to do with fraud but misleading customers. Customers are complaining that they have made losses based on Ronaldo’s promotion of his special edition NFT’s, some of which were bought for $77 a year ago and are now only worth $1. This class action lawsuit is to do with Ronaldo not being transparent about the fact he was being paid to promote Binance and that he had financial incentives to do so. In the lawsuit the plaintiff’s are seeking damages in excess of $1bn.
The Future For Celebrity Endorsements
Since the birth of social media and the ‘influencer’, celebrities have been paid millions of dollars for endorsing anything, they give little thought to who are they are promoting as long as the money is right but the recent lawsuits now being filed indicate that time may now be over and they will have to vet any company that they represent in the future. We only have to look at Fyre Festival to know how easy it is to con people out of money via social media influencing. If you need help with fraud recovery get in touch with a qualified solicitor.
