Financial Crime: Why do people keep suing celebrities like Cristiano Ronaldo and Tom Brady over crypto losses?

Financial Crime: Why do people keep suing celebrities like Cristiano Ronaldo and Tom Brady over crypto losses?
By: market watch Posted On: November 29, 2023 View: 50

Ever since the collapse of cryptocurrencies last year, lawsuits have been flying.

But a series of class-action suits targeting celebrity endorsers of crypto exchanges like FTX and Binance have been piling up in federal court in Miami, all filed by the same group of South Florida lawyers.

The latest suit names global soccer superstar Cristiano Ronaldo for allegedly promoting “the mass solicitation of investments in unregistered securities” sold by Binance, the crypto exchange that was hit with a $4 billion fine last week after pleading guilty to violating the bank secrecy act.

The suit was filed in federal court in the Southern District of Florida this week and centered around Ronaldo’s role in a global marketing campaign launched in 2022 for a series of Binance NFTs — or nonfungible tokens, a form of blockchain-backed artworks that were, for a brief time, wildly popular.

A representative for Ronaldo didn’t immediately respond to a MarketWatch request for comment.

The filing against Ronaldo on Monday came alongside similar class-action suits naming Major League Baseball, Formula 1 racing, Mercedes-Benz MBG, +2.29% MBGYY, +2.21% and the advertising giants Dentsu and Wasserman, which created much of FTX’s global promotion campaign.

Messages left with representatives for MLB, Formula 1, Mercedes, Dentsu and Wasserman weren’t immediately returned.

Those suits are the latest in a series of class-action suits starting last year against celebrity endorsers of failed crypto exchanges such as Voyager and FTX, in which customers lost billions of dollars in deposits.

Over the past 18 months, a group of Florida lawyers led by Adam Moskowitz have brought the suits on behalf of investors who lost money in the crypto collapse against paid endorsers including Tom Brady, Gisele Bündchen, Shaquille O’Neal, Mark Cuban, Shohei Ohtani, Larry David, Steph Curry and Naomi Osaka.

“All of these celebrities were paid hundreds of millions of dollars taken directly from customer deposits,” Moskowitz said in a statement. “Some of the most famous and wealthiest groups in the world may now be held responsible for the dramatic $20 billion dollar [sic] crypto collapse and biggest financial scandals in U.S. history.”    

Moskowitz, who has been joined in the suits by lawyers with the firms Mark Migdal & Hayden and Boies Schiller and Flexner, headed by famed litigator David Boies, is seeking at least $5 billion in damages from those who helped promote the crypto exchanges. 

The cases from last year are ongoing, and the celebrities named have been battling the claims in court. 

Moskowitz, who specializes in class-action suits, said issues revolving around crypto first got his attention more than two years ago, before the entire market crashed, when he came to believe that the special tokens each exchange was minting amounted to an unregistered security.

He first filed a lawsuit against Voyager early last year, before the exchange collapsed and the Securities and Exchange Commission began filing suits against many in the industry accusing them of dealing in unregistered securities. “Right then what we were doing started to gain traction,” Moskowitz said.

A series of favorable court rulings helped his cases to gain steam, he said, and allowed to him to take the lead in such actions.

In another class-action suit filed earlier this year, Moskowitz and his partners sued a group of YouTube financial influencers for their roles in promoting FTX, accusing them of taking cash for uncritically singing that exchange’s praises.

Moskowitz said that several of those suits have been settled but that others have continued. 

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