FTX investors agree to drop civil lawsuit against SBF if he snitches on celebrity promoters

FTX investors may drop claims against the company’s co-founder and former CEO, Sam Bankman-Fried, in return for his support.

Bloomberg reported on April 19 that, under a proposed settlement, Bankman-Fried would cooperate against celebrity promoters named as defendants in a $1.3 million civil lawsuit.

The civil case currently names celebrities as defendants, including former NFL quarterback Tom Brady, former NBA player Shaquille O’Neal, and supermodel Gisele Bundchen.

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Plaintiffs allege that the celebrities brought them into a Ponzi scheme by promoting FTX.

SBF would provide information

To cooperate, Bankman-Fried would need to provide plaintiffs’ lawyers with details about entities related to FTX, including venture capital firms that invested in the exchange and accountants and lawyers that worked with the company during its operations.

He would also provide nonprivileged documents outlining his investments in the AI company Anthropic and an affidavit proving his negative net worth.

In exchange for Bankman-Fried’s cooperation, plaintiffs would drop current and future claims against him. Bloomberg said that plaintiffs acknowledged Bankman-Fried’s participation as “valuable” but recognized that the shift in focus could make their case’s outcome uncertain.

The judge must decide whether to approve the proposal.

Past developments

The relevant case, currently proceeding in the Southern District of Florida, brings together several civil lawsuits against various FTX promoters and insiders.

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Several other defendants previously approached a settlement. A March 27 filing named FTX insiders Gary Wang, Caroline Ellison, and Nishad Singh, former FTX lawyer Daniel Friedberg, several internet personalities, and AFL quarterback William Trevor Lawrence as proposed settling defendants. The current status of the proposal is unclear.

Much earlier, in April 2023, some celebrity promoters including but not limited to Brady and Bundchen asked the court to dismiss claims. The relevant case, Garrison v. Bankman-Fried et al., became part of the consolidated case by June 2023.

All civil cases are distinct from the high-profile criminal case against Bankman-Fried, which has concluded. Bankman-Fried was convicted on criminal charges in November 2023 and received a 24-year prison sentence in March.

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Author: Mike Dalton

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