A class action lawsuit is claiming that prominent finance Youtubers who promoted the FTX exchange on their channels should be held accountable.
Sued For Promoting “Unregistered Securities”
Several popular finance YouTubers have landed in legal hot water with a new class action lawsuit that seeks to hold them responsible for promoting the now-defunct crypto exchange FTX on their channels.
The statement filed by the plaintiff points out,
“Though FTX paid Defendants handsomely to push its brand and encourage their followers to invest, Defendants did not disclose the nature and scope of their sponsorships and/or endorsement deals, payments and compensation, nor conduct adequate (if any) due diligence.”
The lawsuit also claims that the named defendants conspired with FTX to mislead customers into believing that funds held on the platform were safe and not under investigation as unregistered securities. The matter of cryptocurrency being classified as “unregistered securities” have been highly controversial, with the SEC gunning for this classification. If they are successful, then all future promoters of any crypto product would require to disclose the amount they were paid for every promotion.
Gunning For Celebs And Influencers
The ones named in the class action lawsuit are Graham Stephan, Andrei Jikh, Jaspreet Singh, Kevin Paffrath, Ben Armstrong, Brian Jung, Jerremy Lefebvre, and Tom Nash. Some of these YouTubers have millions of subscribers on their channels, and their videos on FTX have garnered hundreds of thousands of views. Furthermore, the talent management company handling the promotion of FTX, i.e., Creators Agency LLC and its founder Erika Kullberg have also been named in the lawsuit.
The plaintiff Edwin Garrison is a private investor who has filed multiple lawsuits against individuals and public figures connected to FTX, like Tom Brady, Stephen Curry, Shaquille O’Neal, Larry David, Kevin O’Leary, and other celebrities who had promoted FTX. He has also filed a lawsuit against former FTX CEO Sam Bankman-Fried.
Government Bodies Taking Strict Action
Bankman-Fried already has several other lawsuits filed against him, including multiple fraud charges from government bodies like the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The Federal Trade Commission (FTC) clearly states that social media influencers must clearly disclose paid promotions on their videos or posts. Certain influencers and celebrities have even gotten into trouble for not disclosing this aspect of the product they have been paid to promote. For example, Kim Kardashian was charged by the FTC for not disclosing that she was paid to promote EthereumMax’s EMAX token. It cost her $1.26 million in fines for the product promotion, which only brought in $250,000 for her.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.