FTX investors suing the cryptocurrency exchange’s celebrity promoters for allegedly helping to facilitate an $11 billion fraud have some new targets, including Major League Baseball, Formula 1 racing and Mercedes-Benz Group AG’s racing team.
Investors’ lawyers sued MLB – the first major sports league to sign a promotional deal with FTX in 2021 – and the other entities in federal court in Miami Monday, accusing them of “aiding and abetting and/or actively participating in the FTX Group’s massive, multi-billion-dollar global fraud.” At one point, MLB umpires wore FTX patches on their sleeves.
FTX investors who say they lost at least $11 billion in FTX’s meltdown allege MLB, Formula 1 and the Mercedes Formula 1 racing team helped push the sale of unregulated securities through promotional deals with the cryptocurrency site. Company founder Sam Bankman-Fried was convicted of fraud and conspiracy earlier this month.
The additions broaden a class-action suit, that already includes more than two dozen celebrities who shilled for FTX in TV commercials and other events. They included big names such as ex-NFL Super Bowl winning-QB Tom Brady, current American League Most Valuable Player Shohei Ohtani and NBA sharpshooter Steph Curry.
Representatives of the two leagues, along with the racing unit of Stuttgart-Germany based Mercedes, didn’t immediately return calls and emails for comment Monday on the suits.
The lawsuit alleges celebrity endorsers and firms that provided financial and legal services to FTX turned a blind eye to red flags about the business and sought to cash-in on the public enthusiasm for the alternate currency.
“MLB and many others were quick to jump into the crypto world with both feet when they saw the potential for fast money,” investors’ lawyers said in one of the suits. The investors filed three separate complaints Monday, which were consolidated into the class-action case.
The celebrity endorsers have argued in court filings that the investors’ claims are meritless because the advertisements and sponsorships didn’t specifically encourage anyone to deposit money in FTX accounts.
‘Misappropriation and Mismanagement’
The endorsers also contend they played no role in the losses stemming from “FTX’s misappropriation and mismanagement” of investors’ funds. Prosecutors accused Bankman-Fried of shifting customer money to Alameda Research, a hedge fund affiliated with FTX, for risky investments and political donations.
MLB officials, who signed a five-year promotional deal with FTX in 2021, canceled it the next year after the cryptocurrency site collapsed. FTX, which filed for Chapter 11 protection in Delaware, is being overseen by a trustee seeking to recoup money for victims of the fraud.
Mercedes Formula 1 team also nixed its promotional deal with FTX in 2022, removing the exchange’s logos from its cars. Mercedes had signed the FTX sponsorship deal in September 2021, when it was the racing league’s reigning champions.
The MLB suit is Garrison v. Major League Baseball, 23-cv-24479, US District Court for the Southern District of Florida (Miami).
--With assistance from Malathi Nayak.