Gisele Bundchen, Tom Brady’s FTX Investment Explained: Crypto Fraud?
What do Tom Brady, Gisele Bundchen and Larry David have in common? They are all being sued for defrauding investors following the collapse of FTX, one of the world’s largest cryptocurrency exchanges run by CEO Sam Bankman-Fried. It begs the question of what Tom Brady’s FTX investments were and how much trouble he and his ex-wife could be in if they are found liable.
If you don’t know anything about crypto but have seen the 2022 Superbowl commercials, you might at least be familiar with the letters FTX. The company hired Curb your enthusiasm‘s Larry David for introducing crypto to potential investors as a sort of anti-speaker and admitting he knew nothing about digital currencies. The commercial ends with David dismissing FTX, with a voice-over warning saying, “Don’t be like Larry. Don’t miss out on the next big thing.” In another 2021 commercial, Brady and Bundchen (still a couple at the time) call their friends to ask if “they’re on crypto.” Here’s everything we know about Tom Brady’s FTX investments and the other celebrities involved in the company’s potentially shady dealings.
Tom Brady’s FTX investment
Tom Brady’s FTX investment began when he and his wife Gisele Bundchen bought an undisclosed equity interest in FTX in June 2021. “It’s an incredibly exciting time in the crypto world, and Sam and the revolutionary FTX team continue to open my eyes to endless possibilities,” Brady said in a press release at the time. “This special opportunity has shown us the importance of educating people about the power of crypto while giving back to our communities and planet. We have an opportunity here to create something very special and I can’t wait to see what we can achieve together.”
Bundchen added: “It was fascinating to learn more about the crypto universe! Cryptocurrency will become more and more familiar to all of us as time goes on. What attracted me most to this partnership was the potential to use resources to help regenerate the earth and enable people to live better lives, bringing about real transformation in our society.”
This announcement of their partnership was followed by a commercial for the exchange in September 2021. In the ad, both he and Bundchen call all of their friends to ask if “they’re on crypto.” “I’m getting into crypto with FTX, are you in?” Brady tells a friend over the phone.
In 2021 and 2022, FTX and its CEO Sam Bankman-Fried were the toast of the crypto industry. The Bahamas-based exchange was one of the largest in the world and was founded just three years earlier in 2019 by then 28-year-old Bankman-Fried. At its peak in 2021, it had more than a million users and over $1 billion in revenue, making it the third largest exchange by volume. But after news on Nov. 3 that FTX could face a liquidity crisis, investors scrambled to divest their holdings, demanding $6 billion worth of withdrawals. FTX immediately froze all accounts. On Friday, November 11, 2022, Bankman-Fried resigned as CEO and the company filed for bankruptcy, potentially letting more than a million creditors down.
That declaration sent shockwaves through an industry struggling to achieve mainstream appeal and credibility, sparking a government investigation and uncovering potential criminal charges. It’s particularly shocking considering Bankman-Fried was considered a crypto prodigy. By the time he turned 30, he was one of the richest people in the world with an estimated fortune of $24 billion. “Here we are with one of the richest people in the world, his net worth going to zero, his business going to zero,” Harvard Law School bankruptcy professor Jared Ellias said, per the New York Times. “The speed of this failure is just incredible.” According to bankruptcy filings filed with the court, FTX could owe more than a million people and organizations.
In a class action lawsuit filed in Florida, Brady, Bundchen, David and other celebrities make a list of those accused of defrauding investors who lost money after FTX’s sudden collapse. FTX is said to have used famous faces to promote the exchange and trick naïve investors into “a Ponzi scheme.” Other celebrities include NBA star Stephen Curry; Jacksonville Jaguars quarterback Trevor Lawrence; baseball player Shohei Ohtani; tennis champion Naomi Osaka; and broadcaster and former basketball player Shaquille O’Neal. Kevin O’Leary, a variety of shark tank is also named in the lawsuit filed Nov. 15 in the Southern District of Florida. The lawsuit alleges that these sports and television stars gave FTX instant credibility and should be held just as guilty as its disgraced former CEO Bankman-Fried. According to Reuters, the lawsuit also alleges that FTX’s income-bearing accounts constitute unregistered securities under federal and Florida law.
“Part of the plan employed by the FTX entities was to use some of the biggest names in sports and entertainment — like these defendants — to raise funds and get American consumers to invest … billions of dollars in the fraudulent FTX platform to keep the entire plan afloat,” the lawsuit alleges, according to the Associated Press. “The deceptive FTX platform maintained by the FTX entities was really a house of cards where the FTX entities shuffled client funds between their opaque affiliated entities using new investor funds obtained by investing in the [yield-bearing accounts] and borrowing to pay interest to the old ones and try to maintain semblance of liquidity,” the lawsuit alleges.
In an email to CBS News, Adam Moskowitz, the attorney leading the class action lawsuit, claimed, “FTX were geniuses in public relations and marketing and knew that such a massive Ponzi scheme – bigger than the Madoff scheme – could only be done with… of helping and succeeding in promoting the world’s most famous, respected and loved celebrities and influencers.”
Based on the information provided in the lawsuit alone, it is unclear exactly what the financial relationship was between FTX and these celebrity backers. However, experts warn that being a spokesperson for crypto carries more weight and impact than sports drinks, for example. “Selling an asset that is a financial instrument … is not the same as selling sneakers,” Charles Whitehead, a Cornell Law School professor not involved in the case, told CNN Business. “There are anti-fraud and consumer protection rules for selling bad sneakers. There are more restrictive rules when it comes to selling financial assets. All these celebrities who are going around doing this kind of sponsorship should stop and ask a securities attorney.”
They certainly aren’t the only celebrities who have gotten into hot water over their crypto promotions. In October 2022, Kim Kardashian was ordered to pay $1.26 million in penalties, disgorgement and interest for illegally promoting crypto assets offered and sold by EthereumMax without disclosing the fact that she was paid for it was. “Federal securities laws are clear that any celebrity or other person promoting a crypto security must disclose the nature, source and amount of compensation received in exchange for the endorsement,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement, in a press release at the time. “Investors have a right to know whether advertisements for a security are impartial, and Ms. Kardashian has not disclosed that information.”
At STYLECASTER our mission is to bring style to people and we only offer products that we think you will love as much as we do. Please note that if you buy something by clicking a link in this story, we may earn a small commission from the sale.
https://stylecaster.com/tom-brady-ftx/ Gisele Bundchen, Tom Brady’s FTX Investment Explained: Crypto Fraud?