Victims who lost their riches in Sam Bankman-Fried’s FTX are pursuing a few YouTubers known for their personal finance knowledge aggressively for more than $1 billion.
A class action lawsuit has been filed against the financial influencers, alleging that they were paid handsomely to promote the FTX brand before its demise. This complaint follows others that have been filed against celebrity endorsers like Tom Brady, Madonna, and Gwenyth Paltrow.
FTX Scandal
In October 2022, FTX went bankrupt over a 10-day period with its CEO, commonly known as SBF, accused of orchestrating a years-long fraud in which he used billions of dollars in customer funds for personal expenses and high-risk bets through the exchange’s sister trading house, Alameda Research.
SBF is currently under house arrest pending his October trial. In January, he entered a not-guilty plea to the accusations. There is no deadline for depositors to receive their money back, and it is unclear how much consumers lost in the FTX scandal. Some estimate the loss to be approximately $8 billion.
They are pursuing those who they believe have misled them in the interim. On March 15, Fortune viewed a class action lawsuit that had been submitted to the Miami division of the United States District Court.
It lists seven litigants who all bought FTX Yield Bearing Accounts, from the US, Canada, the UK, and Australia.
They are suing eight YouTubers, an influencer agency, and its creator for their losses, claiming the defendants “did not disclose the nature and breadth of their sponsorships and/or endorsement relationships, payments and compensation, nor undertake proper (if any) due diligence”.
Some of the defendants listed in the case have adamantly denied ever accepting money in exchange for their favorable opinions of the business at the time.
Some have said they never provided individualized financial advice in an effort to disassociate themselves from the corporation and its problems. Kevin Paffrath, who has 1.87 million YouTube subscribers for his channel “Meet Kevin,” is one of the defendants.
$11 Billion Debt
Meanwhile, FTX filed a presentation for the Official Committee of Unsecured Creditors on Friday, March 17th, outlining the company’s financial position at the time of bankruptcy.
According to the document, which can be seen online under the number 1101, the corporation had a hole in its finances as of November 11th, with a value of around $7 billion.
March 17th filing, FTX had only around $4.8 billion in assets and $11.6 billion in liabilities on November 11th, when the business filed for bankruptcy.
The majority of the obligations were money owing to customers. In addition, FTX.US, which Sam Bankman-Fried repeatedly asserted was entirely solvent, had a deficiency of about $87 million.
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