Class-Action Lawsuit Against Sam Bankman-Fried and Celebrity FTX Promoters Gets a New Judge in Miami

CORRECTION (Dec. 11, 17:36 UTC): An earlier version of this story said the class-action lawsuit had been voluntarily dismissed, or dropped, by the plaintiffs. The case was not dropped, but rather consolidated and transferred to another judge. The updated article also adds quotes from the plaintiffs' attorneys. CoinDesk regrets the error.

A class-action lawsuit filed against former FTX CEO Sam Bankman-Fried and a host of paid celebrity promoters for the now-defunct crypto exchange is forging ahead in Miami.

Three separate lawsuits filed by plaintiffs represented by the boutique Moskowitz Law Firm and white-shoe law firm Boies Schiller & Flexner have been consolidated and will be overseen by U.S. District Court Judge Michael Moore in the Southern District of Florida.

The initial suit called FTX a “house of cards, a Ponzi scheme where the FTX entities shuffled customer funds between their opaque affiliated entities.” The plaintiffs alleged that celebrity promoters of FTX – including National Football League quarterback Tom Brady, comedian Larry David, tennis player Naomi Osaka and the National Basketball Association’s Golden State Warriors team – drew in unsophisticated retail investors and promoted unregistered securities.

“We have been working with our team of crypto experts and are more confident than ever that all of the FTX interest accounts will be found by our state and federal courts to be ‘securities’ and thus each of the FTX Brand Ambassadors will be liable for promoting an unregistered security,” said Adam Moskowitz, the lead attorney for the plaintiffs.

Moskowitz said he was confident the FTX celebrity promoters will also be found to have violated state and federal anti-touting laws.

“We have no doubt that Sam [Bankman-Fried] committed one of the country’s largest financial scams and he had no intention of complying with any of these FTC and SEC celebrity endorsement regulations,” Moskowitz said, referring to the Federal Trade Commission and the Securities and Exchange Commission. “That was part of his fraudulent plan to compete with Voyager, Gemini, Coinbase and BlockFi.”

Voyager Digital and BlockFi are crypto lenders, Coinbase is the only publicly traded crypto exchange in the U.S. and Gemini is also a cryptocurrency exchange.

The class-action suit, which has called for unspecified damages and a jury trial, is one of a handful of similar class-action lawsuits already filed against Bankman-Fried and FTX since the exchange filed for bankruptcy protection one month ago.

Read more: The FTX Downfall: Full Coverage