A federal judge narrowed but stopped short of dismissing a lawsuit by investors seeking to hold celebrities like sports stars Tom Brady, Stephen Curry and Shohei Ohtani liable for promoting the collapsed cryptocurrency exchange FTX.
The investors said the defendants ignored “red flags” and hid millions of dollars of payments to promote FTX as “brand ambassadors,” as part of a civil conspiracy with Sam Bankman-Fried’s exchange to defraud them into becoming customers.
In a 49-page decision on Wednesday, U.S. District Judge K. Michael Moore in Miami dismissed 12 of the 14 claims, saying the investors did not prove the celebrities knew FTX was a fraud, and merely receiving payments did not establish a conspiracy.
He said the investors could try to prove the defendants violated Florida law by helping FTX sell unregistered securities, finding it plausible that FTX “needed influencers” to sell its products. A claim under Oklahoma law also survived.
Other defendants include sports stars David Ortiz and Naomi Osaka, supermodel Gisele Bundchen, comedian Larry David, businessman and TV personality Kevin O’Leary, and the Golden State Warriors basketball team.
Lawyers for the defendants did not immediately respond to requests for comment on Thursday.
Adam Moskowitz, a lawyer for the investors, called the decision a victory because Florida law allows strict liability, meaning the defendants did not have to know FTX was a fraud.
He said he plans to file an amended complaint with additional defendants, including Major League Baseball and Formula 1 Racing. The sports stars Shaquille O’Neal and Trevor Lawrence previously settled.
FTX filed for bankruptcy protection in November 2022. Bankman-Fried is appealing his fraud conviction and 25-year prison sentence.
Last October, FTX won court approval for its bankruptcy plan, which would allow it to fully repay customers.
The case is In re FTX Cryptocurrency Exchange Collapse Litigation, U.S. District Court, Southern District of Florida, No. 23-md-03076.