Bankman-Fried Agrees to Help FTX Investors Sue Celebrity Crypto Promoters
A group of FTX investors has agreed to drop legal claims against Sam Bankman-Fried.
In exchange, the disgraced former crypto exchange CEO will cooperate in the investors’ suits against other defendants stemming from FTX’s collapse, including various celebrities paid to promote the exchange, according to court documents filed Friday (April 19).
The settlement, first reported by Bloomberg News, comes weeks after Bankman-Fried was sentenced to 25 years in prison for the fraud that led to the multibillion dollar collapse of FTX in November of 2022.
Former investors and customers in FTX have sued some of the people who endorsed the company when it was flying high, alleging they helped further the exchange’s fraud.
According to the settlement, the plaintiffs believe Bankman-Fried has “knowledge and other information” the plaintiffs find valuable in that case. As part of the agreement, Bankman-Fried would also hand over non-privileged documents that list his assets and his investment in artificial intelligence (AI) startup Anthropic, as well as an affidavit certifying his net worth as negative.
He will also turn over any information he has on venture capital firms that invested in FTX and attorneys and accountants who worked for the company.
Even before criminal charges were filed against Bankman-Fried, a group of investors sued FTX’s celebrity endorsers — a group that includes Tom Brady, Gisele Bündchen, and Shaquille O’Neal — for securities law violations, claiming they failed to conduct proper due diligence.
The suit was filed in federal court in Miami in November 2022, days after FTX declared bankruptcy and weeks before Bankman-Fried was accused of using customer funds to finance investments, real estate purchases and political donations.
Last week’s settlement came days after Bankman-Fried appealed his conviction and sentence, part of what could be a yearslong process.
A report April 11 by Reuters noted that Bankman-Fried’s former lawyer, Mark Cohen, argued at a conference that day there was a disparity between his ex-client’s 25-year sentence and Binance founder Changpeng Zhao’s for violating anti-money laundering laws, which will likely be no more than 18 months.
The 25-year sentence was less than the 40- to 50-year prison term that prosecutors were seeking, but far more than the five to six years pushed by Bankman-Fried’s lawyers.
“At the end of the day, the criminal justice system thrives only if it’s seen as fair,” Judge Lewis Kaplan said when announcing the sentencing. “People need to feel it is fair, or we’re back to trial by combat. The punishment must fit the seriousness of the crime. And this was a serious crime.”
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