Shaquille O’Neal has finally been served papers in a lawsuit over his role in promoting FTX after lawyers accused the former basketball star of hiding from them. O’Neal was named as a defendant in the lawsuit filed last November in a Florida federal district court, alongside fellow high-profile endorsers such as Tom Brady and Larry David. The lawsuit accuses Bankman-Fried, O’Neal, and other celebrity spokespeople, including Tom Brady and Larry David, of defrauding FTX investors. It alleges that the celebrities “actively participated” in FTX’s offer and sale of unregistered securities.
FTX, which collapsed late last year, shuffled customer money between affiliated entities, using new investor funds and loans to pay interest on old ones in an attempt “to maintain the appearance of liquidity,” according to lawyers at the Moskowitz Law Firm, which is representing investor Edwin Garrison in the class action. Lawyers alleged that FTX knew that such a massive Ponzi scheme could only be successful with the help and promotion of the most famous, respected, and beloved celebrities and influencers in the world.
In a video posted on FTX’s account in June 2022, O’Neal said he was “excited to be partnering with FTX to help make crypto accessible for everyone. I’m all in. Are you?” Dubbed “Shaqtoshi” by FTX, O’Neal said in an advertisement that he was “all in” on the exchange. But he later told CNBC he doesn’t understand crypto and will probably avoid it following the exchange’s collapse.
The lawsuit accused Bankman-Fried, O’Neal, and other celebrity spokespeople, including Tom Brady and Larry David, of defrauding FTX investors. Lawyers for the plaintiffs said that the celebrities “actively participated” in FTX’s offer and sale of unregistered securities. Several of those named in the lawsuit filed a motion to dismiss, arguing that it was FTX, and not its celebrity endorsers, that enticed users to open “Yield Bearing Accounts” (YBAs), the type of account at the center of the complaint.
The lawsuit is an example of how celebrity endorsements can have a significant impact on a crypto project’s success. FTX’s use of celebrity endorsers shows that the company was attempting to capitalize on the celebrity’s popularity to boost its image and appeal to new investors. The lawsuit, however, highlights the potential risks of this approach. Investors may be attracted to a project based solely on celebrity endorsements, which may have nothing to do with the actual value of the project or its likelihood of success.
Critics of crypto often call it a Ponzi scheme, and the FTX lawsuit feeds into this narrative. However, crypto is not inherently a Ponzi scheme. Ponzi schemes are fraudulent investment schemes that promise high returns to early investors using money from new investors. Crypto, on the other hand, is a legitimate asset class with value determined by supply and demand. Some crypto projects may be scams, but not all of them are, and it is up to investors to do their due diligence before investing.
In conclusion, the FTX lawsuit involving Shaquille O’Neal and other celebrity endorsers highlights the risks of relying on celebrity endorsements in the crypto space. It also underscores the importance of investors conducting their due diligence before investing in a crypto project. While some may call crypto a Ponzi scheme, it is a legitimate asset class with value determined by supply and demand, and not all crypto projects are scams.