A new class action lawsuit claims that prominent financial YouTubers, including Graham Stephan, Andrei Jikh and Jaspreet Singh, should be held accountable for promoting the now-disgraced cryptocurrency exchange FTX.
The plaintiff in the lawsuit is private investor Edwin Garrison, who includes former FTX CEO Sam Bankman-Fried himself, as well as Tom Brady, Stephen Curry, Shaquille O’Neal, Larry David and Kevin O’Leary. Bankman-Fried has also filed lawsuits against several celebrity promoters. Bankman-Fried has also been indicted on numerous fraud charges by multiple U.S. government agencies, including the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). It has been.
According to Federal Trade Commission (FTC) guidelines for social media influencers, creators must clearly disclose when they are being paid to promote their products. For example, Kim Kardashian last year settled with the FTC for $1.26 million after failing to properly disclose that he received $250,000 to promote his EMAX token on EthereumMax.
“FTX made substantial payments to Defendant to promote its brand and encourage followers to invest, but Defendant failed to disclose the nature and extent of the sponsorship and/or endorsement transactions, payments, and compensation. , also did not conduct proper (if any) due diligence.Lawsuit Read.
Kevin Paffrath, one of the influencers involved in the lawsuit, told TechCrunch that the allegations are false.
“When we regularly say in our videos, ‘Our sponsor is…’ or ‘Provided by…’, it’s clear that this is advertising,” he told TechCrunch. You even have to tick a small box that says “This video contains paid promotions”. All of FTX’s videos have a small disclaimer stating that they are paid. ”
The lawsuit also accuses YouTubers of participating in a civil conspiracy with FTX to “give the false impression that cryptocurrency assets held on the FTX platform are safe and not invested in unregistered securities.” It claims that it misled its customers.
SEC Chairman Gary Gensler has argued that existing securities laws apply to cryptocurrencies, but many in the cryptocurrency industry argue otherwise. This lack of clarity makes it difficult for cryptocurrency companies and influencers to know when to comply with stricter standards for advertising securities.
“MS. The Kardashian lawsuit also serves as a reminder to celebrities and others that the law requires them to disclose when and how much they will be paid to facilitate their investment in securities. .
If FTX is considered a security, these YouTubers could be held liable for not sharing exactly what FTX paid them.
