Bankman-Fried’s cooperation could strengthen investors’ case against FTX promoters.
FTX investors have finalized an agreement with the exchange’s former CEO, Sam Bankman-Fried, to end their legal disputes in exchange for his cooperation in their lawsuits against celebrity endorsers of FTX.
Pending the Southern District of Florida court’s approval, the settlement proposes to conclusively resolve all claims against Bankman-Fried released by FTX investors. If approved, this settlement would free him from additional civil charges after his 25-year prison sentence for fraud.
As part of the deal, Bankman-Fried “shall reasonably cooperate with Class Counsel,” offering testimony and documents to help the class action against FTX and facilitate victim recovery. These documents include details of his investments in the AI company Anthropic.
Bankman-Fried would also disclose information about his connections and dealings with companies and celebrities, including Tom Brady, Stephen Curry, Naomi Osaka, Kevin O’Leary, and Gisele Bündchen, to name a few.
Following FTX’s bankruptcy in November 2022, investors filed a class-action lawsuit accusing the crypto exchange and its co-founder, Sam Bankman-Fried, of violating Florida law and misleading customers. The lawsuit alleges this misconduct resulted in billions of dollars in investor losses.
The suit also targets celebrities who promoted FTX’s controversial Yield-Bearing Accounts (YBAs). Plaintiffs claim these endorsements fueled investor interest in the unregulated accounts, ultimately contributing to their financial losses when FTX halted customer withdrawals.
The list of defendants additionally includes the prestigious law firm Sullivan & Cromwell (S&C). In February, a group of creditors filed a separate lawsuit against the firm, alleging its involvement in FTX’s fraudulent activities.
The investors’ potential gains from the settlement with FTX promoters are estimated at $1.3 million.