Investors and customers of crypto exchange FTX have reached a deal to drop all legal lawsuits against Sam Bankman-Fried (SBF), the exchange’s co-founder. In return, they could get Bankman-Fried’s assistance in separate lawsuits against other defendants.SBF is TerrifiedCelebrity Endorsers Under Scrutiny
The FTX collapse left countless investors in financial ruin. Now, the focus shifts to the celebrities and influencers who promoted FTX.
In November 2022, just a few weeks after FTX declared insolvency, FTX investors initiated a class-action lawsuit against the exchange and its leader. Besides, they also named a number of celebrities who took part in promoting the exchange.
With the spotlight now on high-profile celebrities, the already-famous case is likely to attract even more media attention. This double-edged sword could raise awareness of financial fraud within the cryptocurrency space while also generating outrage from fans of the implicated celebrities. It also raises questions about celebrity responsibility when promoting financial products.
Several celebrities, including Gisele Bundchen, have already denied any wrongdoing or knowledge of FTX’s issues. Bundchen said previously she was “blindsided” by the shocking implosion of FTX.
FTX, once a major player in the cryptocurrency exchange market, experienced a dramatic downfall in late 2022. Founded in 2019 by Sam Bankman-Fried, FTX promised a user-friendly platform for buying and selling digital currencies. However, behind the scenes, FTX was using funds from a sister company, Alameda Research, to keep things afloat.
In November 2022, tensions between FTX and another major rival, Binance, triggered a wave of panic among FTX customers. Fearing the worst, customers rushed to withdraw their money from the exchange. This mass exodus of funds created a domino effect. As more customers withdrew, the value of FTX’s own token, FTT, began to plummet.
The decline weakened FTX’s financial position, creating a domino effect that ultimately led to its downfall.
The exchange eventually filed for bankruptcy protection in November 2022 and Bankman-Fried stepped down as CEO. Regulatory investigations soon followed, focusing on Bankman-Fried’s financial maneuvers with Alameda Research. In late March, he was sentenced to 25 years in prison for fraud.
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Author: Nicholas Say
