Many celebrities, some of whom struck multimillion-dollar endorsement deals, are finding themselves involved in lawsuits as co-defendants alongside the companies that hoped to leverage star power to drive interest in their products.
SALT LAKE CITY — Celebrity endorsements have been a thing for years but a slew of appearances by A-list stars shilling relatively new cryptocurrencies and NFTs while the markets were roaring has come back around as values have tanked and disgruntled investors are seeking legal redress for feeling duped.
According to the Hollywood Reporter, plaintiffs in the case claim FTX operated like a "Ponzi scheme" that used funds obtained through new investors to pay off old investors and maintain the appearance of liquidity. The suit claims that FTX's interest-bearing accounts were securities, which would obligate promoters to disclose compensation from the company.
According to The Wall Street Journal , plaintiffs in the Yuga and FTX cases make a mix of claims, some under federal law and others brought under state laws that impose a range of legal requirements on the promotion of financial products. Some lawsuits also have cited state laws prohibiting unfair business practices.Per rules overseen by the U.S.
Last fall, the SEC charged Kim Kardashian for endorsing on Instagram digital token creator EthereumMax without disclosing a $250,000 payment she received for the promotion. She settled the case for $1.3 million, according to the Hollywood Reporter. The same report noted DJ Khaled and boxer Floyd Mayweather Jr. have resolved similar suits filed by the SEC over failing to disclose payments they received for promoting investments in an initial coin offering.
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