A group of investors who did business with bankrupt cryptocurrency exchange FTX filed a class-action lawsuit against several Youtubers on Wednesday (15), alleging that internet influencers influenced them to buy securities without registration by promoting the collapsing brokerage.
The lawsuit seeks $1 billion in damages and was brought against content creators who reach millions of people online, including cryptocurrency YouTuber BitBoy Ben Armstrong, and finance content creator Graham Stephan, among seven other individuals, in addition to from the talent management company Creators Agency.
Stephan did not immediately respond to requests for comment from the decrypt. Armstrong told the decrypt that he has never received a dollar from FTX, adding that he plans to “hit back immediately.”
“I never spoke to anyone at FTX or as a marketing agent speaking on their behalf. Not once,” he said via Twitter direct message. “Therefore, the allegations against me are 100% false and it will be extremely easy to provide proof of this.”
“Fraudulent scheme”
The unregistered securities “endorsed and promoted” would be income-earning accounts offered by FTX, the lawsuit claims, adding that YouTubers were allegedly paid to endorse FTX, which was a “fraudulent scheme designed to take advantage of investors around the world. ”
Edwin Garrison, an Oklahoma resident, USA, led the process. And although the lawsuit was filed in a Florida court, the plaintiffs include residents of the UK, Canada and Australia as well.
The defendants named in the case are liable for damages due to “misrepresentations and omissions regarding the FTX platform” and played a crucial role in the growth of the collapsing business, the lawsuit states.
“FTX could not have reached the size it has without the massive impact of these influencers, who promoted the misleading platform, receiving undisclosed payments ranging from tens of thousands of dollars to multi-million dollar bribes,” states the court text.
The lawsuit alleges that YouTube played a central role in how influencers promoted FTX, noting that the video streaming platform is more popular today than traditional television.
After FTX’s collapse, several of the defendants in the lawsuit “purged their YouTube channels of all videos endorsing FTX and praising Sam Bankman-Fried” and replaced them with apology videos, the lawsuit states.
The class action is a consolidation of others filed against FTX founder and founder Sam-Bankman Fried, several FTX members, and brand and celebrity ambassadors, including retired NFL quarterback Tom Brady and Brazilian supermodel Gisele Bündchen.
FTX collapse
FTX, once one of the largest cryptocurrency exchanges, collapsed in November 2022 after a rush to cash out was triggered by a sharp drop in its native token FTT.
Bankman-Fried was later arrested and charged with a series of financial crimes, to which he has since pleaded not guilty. He is under house arrest in California.
Last month, Bankman-Fried was the subject of additional allegations stemming from allegedly illegal campaign donations. His criminal trial is scheduled for October this year.
*Translated by Gustavo Martins with permission from decrypt.
