YouTube influencers hit with $1 billion lawsuit to promote FTX
A group of investors who did business with defunct cryptocurrency exchange FTX filed a class-action lawsuit against several internet influencers on Wednesday, alleging the content creators pushed unregistered securities on their viewers and followers while promoting the collapsed exchange.
The trial seeks over $1 billion in damages and was filed against content creators who made millions online, including BitBoy Crypto creator Ben Armstrong and finance YouTube creator Graham Stephan, among seven other individuals and talent management firm Creators Agency.
Stephan did not immediately respond to requests for comment from Decrypt. Armstrong said Decrypt that he never received a dollar from FTX, adding that he plans to “countersue immediately.”
“I have never spoken to anyone in FTX or as a marketing agent acting on their behalf. Not once,” he said via direct message on Twitter. “So the allegations against me are 100% false and it will be extremely easy to prove this. “
The unregistered securities “endorsed and promoted” were yield-bearing accounts offered by FTX, the lawsuit alleges, adding that the creators were paid to support FTX, which was a “fraudulent scheme […] designed to benefit investors from around the world.”
Oklahoma resident Edwin Garrison led the lawsuit. And although the lawsuit was filed in Florida’s Southern District Miami Division Court, the plaintiffs also include residents of the United Kingdom, Canada and Australia.
The defendants named in the suit are liable for damages for “misrepresentations and omissions regarding the FTX platform” and played a critical role in raising the collapsed business, the lawsuit alleges.
“FTX could not have risen to such great heights without the massive impact of these Influencers, who hyped the deceptive FTX platform for undisclosed payments ranging from tens of thousands of dollars to multimillion dollar bribes,” it said.
The lawsuit alleges that YouTube played a central role in how influencers promoted FTX, noting that the video streaming platform is more popular than network television.
After the collapse of FTX, several of the suit’s defendants “flushed their YouTube channels of all video clips supporting FTX and praising Sam Bankman-Fried” and replaced them with apology videos, the suit alleges.
The class action is a consolidation of others filed against FTX founder and former CEO Sam-Bankman Fried, several FTX insiders, and ambassadors for celebrity brandswhich includes retired National Football League quarterback Tom Brady, supermodel Gisele Bündchen and comedian Larry David.
FTX, once one of the largest cryptocurrency exchanges, collapsed last November after a run on the exchange was triggered by a steep drop in its native token FTT. The drive revealed that FTX did not have one-to-one reserves of customer funds when it failed to honor customer withdrawals, forcing it to file for Chapter 11 bankruptcy.
Bankman-Fried was later arrested and charged with a number of financial crimes, which he has been doing ever since pleaded not guilty. FTX insiders including Caroline Ellison and Gary Wang have pleaded guilty to crimes in connection to FTX’s collapse, and cooperates with the authorities.
Last month, Bankman-Fried was hit by Additional costs originating from allegedly illegal campaign donations. His criminal trial is due to take place in October.
