Decrypt’s Art, Fashion, and Entertainment Hub.
A group of investors who did business with defunct cryptocurrency exchange FTX brought a class action lawsuit against multiple internet influencers Wednesday, alleging the content creators pushed unregistered securities on their viewers and followers while promoting the collapsed exchange.
The lawsuit seeks over $1 billion in damages and was brought against content creators that reached millions online, including BitBoy Crypto creator Ben Armstrong and finance YouTube creator Graham Stephan, among seven other individuals and the talent management firm Creators Agency.
Stephan did not immediately respond to requests for comment from Decrypt. Armstrong told Decrypt that he never received a dollar from FTX, adding that he plans on “countersuing immediately.”
“I’ve never spoken with anyone at FTX or as a marketing agent acting on their behalf. Not once,” he said via direct message on Twitter. “So the allegations against me are 100% false and it will be extremely easy to provide evidence of this.”
The unregistered securities “endorsed and promoted” were yield-bearing accounts offered by FTX, the lawsuit claims, adding that the creators were paid to endorse FTX, which was a “fraudulent scheme [...] designed to take advantage of investors from across the globe.”
Edwin Garrison, a resident of Oklahoma, led the lawsuit. And though the lawsuit was brought in Florida’s Southern District Miami Division Court, the plaintiffs include residents of the United Kingdom, Canada, and Australia as well.
The defendants named in the case are responsible for damages due to “misrepresentations and omissions regarding the FTX platform” and played a crucial role in elevating the collapsed business, the lawsuit claims.
“FTX could not have arisen to such great heights without the massive impact of these Influencers, who hyped the Deceptive FTX Platform for undisclosed payments ranging from tens of thousands of dollars to multimillion dollar bribes,” it states.
The lawsuit claims that YouTube played a central role in how influencers promoted FTX, noting that the video streaming platform is more popular than network television.
Following the collapse of FTX, several of the lawsuit’s defendants “scrubbed their YouTube channels of all video clips endorsing FTX and praising Sam Bankman-Fried” and replaced them with apology videos, the lawsuit claims.
The class action lawsuit is a consolidation of others brought against FTX founder and former CEO Sam-Bankman Fried, several FTX insiders, and celebrity brand ambassadors, which include retired National Football League Quarterback Tom Brady, supermodel Gisele Bündchen, and comedian Larry David.
FTX, once one of the largest cryptocurrency exchanges, collapsed last November after a run on the exchange was triggered by a steep drop in its native token FTT. The run revealed FTX did not hold one-to-one reserves of customer assets as it failed to honor customer withdrawals, forcing it to file for Chapter 11 bankruptcy.
Bankman-Fried was later arrested and charged with a litany of financial crimes, to which he has since pleaded not guilty. FTX insiders including Caroline Ellison and Gary Wang have pleaded guilty to crimes in connection to FTX’s collapse, however, and are cooperating with authorities.
Last month, Bankman-Fried was hit with additional charges that stem from allegedly illegal campaign donations. His criminal trial is set to take place in October.