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FTX Investors Consider Dropping Claims Against Sam Bankman-Fried
FTX investors are contemplating dropping claims against the company’s co-founder and former CEO, Sam Bankman-Fried, in exchange for his support. According to a report by Bloomberg on April 19, a proposed settlement would see Bankman-Fried cooperating against celebrity promoters named as defendants in a $1.3 million civil lawsuit. The lawsuit currently lists celebrities such as former NFL quarterback Tom Brady, former NBA player Shaquille O’Neal, and supermodel Gisele Bundchen as defendants. Plaintiffs allege that these celebrities lured them into a Ponzi scheme by promoting FTX.
Details of Cooperation
As part of the agreement, Bankman-Fried would be required to provide plaintiffs’ lawyers with information regarding entities associated with FTX, including venture capital firms that invested in the exchange, as well as details about accountants and lawyers who were involved with the company during its operations. Additionally, he would need to offer nonprivileged documents outlining his investments in the AI company Anthropic, along with an affidavit confirming his negative net worth.
In return for Bankman-Fried’s cooperation, plaintiffs are prepared to drop both current and future claims against him. While acknowledging the value of Bankman-Fried’s participation, plaintiffs are cognizant that the change in focus could introduce uncertainties regarding the outcome of their case. Ultimately, the decision to approve the proposed settlement rests with the judge overseeing the case.
Previous Developments
The ongoing case, which is unfolding in the Southern District of Florida, consolidates multiple civil lawsuits against various FTX promoters and insiders. Notably, several other defendants have previously sought to settle. In a filing dated March 27, FTX insiders Gary Wang, Caroline Ellison, and Nishad Singh, former FTX lawyer Daniel Friedberg, various internet personalities, and AFL quarterback William Trevor Lawrence were identified as proposed settling defendants. The current status of this settlement proposal remains uncertain.
Earlier, in April 2023, some celebrity promoters, including Brady and Bundchen, petitioned the court to dismiss claims. The case in question, known as Garrison v. Bankman-Fried et al., became part of a consolidated case by June 2023. It is important to note that all civil cases are distinct from the notable criminal case against Bankman-Fried, which has been finalized. After being convicted on criminal charges in November 2023, Bankman-Fried was sentenced to 24 years in prison in March.
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