Australian Crypto YouTube Star Caught in FTX Class Action
But FTX’s growth strategy also relied on influential relationships with the likes of Mr. Paffrath, Mr. Nash, Graham Stephan, Andrei Jikh, Brian Jung, Jeremy “Financial Education” Lefebvre, Ben “BitBoy Crypto” Armstrong and Erika Kullberg, all of whom are named in the Florida-based class action lawsuit as well as talent management firm Creators Agency.
According to the class action lawsuit filed last week in the Southern District of Florida, the U.S. Securities and Exchange Commission defines such “yield-bearing accounts” as unregistered securities.
“What differentiates influencer marketing from other types of celebrity marketing is that it is perceived as more authentic and trustworthy because, due to an influencer’s rapport with their fans, their endorsements are not not dismissed as fake and sponsored,” the lawsuit read.
The aggrieved investors allege YouTube influencers promoted FTX products that said they were “guaranteed” to generate returns, which lawyers said were unregistered securities.
“For this, the defendants are liable for the plaintiffs’ losses, jointly and severally and to the same extent as if they were the FTX entities themselves,” the lawsuit states, which notes that the damages exceed $1 billion.
Mr. Nash did not answer questions.
FTX collapsed dramatically last November after revelations that Mr Bankman-Fried had authorized the use of more than $8 billion in customer deposits as trading capital for his hedge fund Alameda Research, much of which some of that money through risky trades and venture capital investments.
Hundreds of thousands of FTX customers are now clamoring to get their deposited money back via a series of bankruptcy filings around the world, including in Australia, where more than $42 million is believed to have been clawed back by two locally incorporated entities called FTX. Australia and FTX. Express.
In recent months, former executives of FTX and Alameda Research have testified that Mr. Bankman-Fried directed them to deliberately construct technical backdoors that would allow Alameda an “unlimited line of credit” from deposits. FTX customers.
Mr Bankman-Fried was later arrested and charged with a litany of financial crimes, to which he has since pleaded not guilty. His criminal trial is due to take place in October.
While evidence is still being collected, bankruptcy attorneys have recovered over $5 billion in cash, cryptocurrencies and investment securities that will be distributed to creditors over the next few years.
Following FTX’s collapse, the Florida-based class action lawsuit alleges that Mr. Nash, Mr. Paffrath and Mr. Stephan all cleaned their YouTube channels of music videos endorsing FTX and praising Mr. Bankman-Fried.
Instead, they released apology videos acknowledging their important role in promoting FTX and causing investors billions of dollars in losses.
One influencer, Ben “BitBoy” Armstrong, has since denied any relationship with FTX and alerted followers that he was considering counter-suing.
But according to court documents filed on Monday, attorneys representing the class action allege that Mr. Armstrong “began to harass them” after the initial filing with “endless phone calls, tweets and emails” and ” insulting and threatening messages on Twitter, YouTube and other social networks”. media”.
Mr. Armstrong said The Australian Financial Review that a class action lawsuit was unlikely to recover anyone’s money.
“I am the only influencer on the lawsuit who has not only never received any money from FTX in the form of sponsorship or affiliation, but I have never even spoken with a single FTX employee about such an agreement. “said Mr. Armstrong.
High-profile crypto influencers have been gaining notoriety lately. Earlier this week, Balaji Srinivasan, former chief technology officer of Coinbase and general partner at venture capital firm Andreessen Horowitz, bet fellow Twitter user James Medlock $2 million that the price of bitcoin would rise. from $20,000 to $1 million in 90 days. .
The bet was circulated on Twitter and sparked a flurry of coverage and speculation, prompting a reappearance of Mr Srinivasan’s earlier comment which suggested ‘FTX is a glimpse into state failure’.
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