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FTX Collapse

FTX Collapse & Celebrity Crypto Fraud Class Action News

Investigating the FTX collapse and celebrity crypto class action lawsuits filed on behalf of defrauded investors. Seeking justice and compensation following crypto fraud schemes.

The recent FTX collapse has cast a shadow on the cryptocurrency industry as a whole, as well as shined a bleak spotlight on the risks celebrities have taken in the investment world to land them in potential legal trouble.

Class action lawsuits have named top celebrities as defendants in the latest crypto collapse, leading consumer rights attorneys to wonder how far the crypto world can go before rightful regulation and oversight can right the wobbling ship.

The FTX collapse is merely the latest apparent casualty in the crypto industry, though related fraud and illegal investing schemes are by no means rare. The size of the fallout, however, from a peak valuation of $32 billion to practically zero, has millions of investors and onlookers wary of the huge risks of investing in the crypto space, and wondering if there is any legal recourse.

The Lyon Firm is investigating the FTX collapse, crypto fraud and other forms of securities fraud on behalf of plaintiffs nationwide.

FTX Collapse & Celebrity Involvement

A fascinating element of the alleged FTX Ponzi scheme is the involvement of some of the country’s biggest celebrities, from Larry David to Tom Brady and Gisele Bundchen, as well as many other prominent athletes.

One class action complaint argues that FTX employed “some of the biggest names in sports and entertainment” to fiercely market the platform without properly protecting billions in investor money. And because these celebs appeared in FTX ads on television, online, and social media, the celebrities and athletes may be liable for investors’ damages.

The complaint goes on to say the FTX defendants made “misrepresentations” about the FTX platform in order to “induce confidence and to drive consumers to invest in what was ultimately a Ponzi scheme.”

Plaintiffs say perhaps millions of customers were impacted by the alleged misrepresentations by FTX management and the celebrity “FTX ambassadors” that ultimately sold the product. Filed in Florida, the complaint says the scheme violated Florida’s Deceptive and Unfair Trade Practices Act and the Florida Securities and Investor Protection Act.

Why Did FTX Go Bankrupt?

The class action lawsuit comes in the wake of the sudden collapse of FTX and Sam Bankman-Fried, the mastermind behind the company. After being valued at $32 billion just nine months ago, investors are wondering if they can salvage anything.

FTX announced it was entering voluntary Chapter 11 proceedings when there was essentially a run on its cash reserves. While there are several unknowns as to how this all played out, it is clear the company ran out of cash when customers rushed to withdraw their money by selling cryptocurrencies previously purchased on the platform.

FTX was allegedly using the client investments as collateral to borrow money which it had transferred to a linked company to invest in crypto businesses and other schemes.

As the dust settles, more information will be revealed, but victims may find themselves on the wrong side of the safe bet that FTX sold them.

The Lyon Firm represents plaintiffs nationwide in a wide variety of fraud and deceptive sales cases. Contact the firm if you have been the victim of crypto fraud or another illegal securities scheme.