Former FTX Exec Cooperating in Lawsuit Against Celebrity Promoters
Celebs caught in the crosshairs of promoting FTX have been dealt another blow.
Daniel Friedberg, the former Chief Regulatory Officer at FTX and the Chief Compliance Officer of FTX US, moved to provide evidence that promotional activity for FTX had indeed originated in Florida.
The evidence, which Friedberg provided “under penalty of perjury,” could undermine a defense argument from some of the defendants that the Miami court lacks jurisdiction and that the claims have no connection to Florida.
According to an amended complaint, filed in a Florida District Court on May 11, the vice president of business development for FTX US, Avinash “Avi” Dabir, was physically based in Miami in early 2021 and was responsible for managing brand ambassadors for FTX, including several high-profile defendants in the case such as former basketball player Shaquille O’Neal, comedian Larry David, retired NFL player Tom Brady, and the Japanese lawn tennis star Naomi Osaka.
The class action, brought by Moskowitz on behalf of FTX investors, also targets the exchange’s founder Sam Bankman-Fried.
The plaintiffs in the class-action lawsuit allege that FTX paid its brand ambassadors to illegally promote interest-bearing accounts that were actually securities, but which FTX did not register with the U.S Securities and Exchange Commission (SEC) as required by law.
According to Florida state law, the plaintiffs argue, anyone who promotes unregistered securities is liable for any losses that customers suffer from holding the investment, such as a drop in the value of a portfolio of various digital coins that performed poorly.
The lawsuit, which also includes the NBA basketball team the Golden State Warriors, seeks damages in the billions of dollars from all parties.
The defense’s case
The defense attorneys have earlier presented two primary arguments in the case.
The first argument asserts that the lawsuit should be dismissed since their clients only made generally favorable statements about FTX in their advertisements and never referred to the unregistered securities accounts that the plaintiffs’ claim resulted in losses.
The defendants argue that since the high-profile endorsers did not promote the specific product responsible for the damages, they cannot be held liable for any losses.
The second argument applies to the endorsers who do not reside in Florida, including Curry, Osaka, and David, as well as the Warriors team based in Los Angeles.
These defendants maintain that none of their activities on behalf of FTX, such as contract signings or ad tapings, occurred in Florida. As a result, they argue that the lawsuit should not be subject to Florida jurisdiction.
In a declaration filed on April 14, David stated that “I did not appear in Florida on behalf of any FTX entity nor did I take any action in the State of Florida related to the Advertising Contract.”
The same filing said that “Larry David, Stephen Curry, and Naomi Osaka are domiciled in California,” arguing that “these facts make clear that there is no general jurisdiction over Non-Resident Defendants.”
It will ultimately be up to the courts to decide whether the connections are sufficient to establish jurisdiction and whether the FTX accounts promoted by the defendants qualify as unregistered securities.
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