Pop sensation Taylor Swift pulled out of a $100 million deal with FTX, thus saving herself from a class-action lawsuit.
Taylor Asked The Right QuestionsTaylor Swift did not fall for FTX because she asked one simple question. The pop star was on the verge of signing a million-dollar contract with the now-bankrupt crypto firm, which could have landed her in serious trouble today. Like many other celebrities, FTX had tried to rope in Taylor to promote the brand in a series of high-profile endorsements. However, she did not proceed with the deal because the company could not satisfy her query about FTX offering unregistered securities.
Prosecutor Adam Moskowitz is leading the class-action lawsuit against celebrities who promoted the firm and recently spoke about Taylor Swift in a podcast. Moskowitz recently appeared on “The Scoop” podcast and claimed that, unlike the other celebrities who were signed on by the firm, Taylor has been asking questions about FTX’s offerings.
According to Moscowitz, Taylor asked the question - “Can you tell me that these are not unregistered securities?” before pulling out of the deal.
Celebrities In FTX Hot WaterThe plaintiffs behind the lawsuit are seeking damages over $5 billion from the celebrity endorsers like Tom Brady, Gisele Bundchen, Larry David, Shaquille O’Neal, Steph Curry, and a bunch of popular finance YouTubers. Moskowitz claimed that none of these celebrities did their due diligence to check if the company was breaking the law. Therefore the lawsuit is accusing them of promoting unregistered security and seeking recompense for customers who lost money in the FTX debacle.
The lawsuit claims,
"In order to induce confidence and to drive consumers to invest in what was ultimately a Ponzi scheme, [the defendants] made numerous misrepresentations and omissions."
The FTX DramaLast November, news broke that the FTX crypto exchange was commingling funds with its sister concern, Alameda Research. This led to a surge of customers withdrawing their funds and investors pulling out of FTX. Unfortunately, owing partly to CEO Sam Bankman-Fried’s lavish spending and a $65 billion line of credit, the company did not have the liquidity pool to fund the mass withdrawals, resulting in the ultimate bankruptcy announcement.
Are Cryptocurrencies Unregistered Securities?The company has also been charged by the SEC for dealing in what it calls “unregistered securities.” Any tradeable asset that holds value is called a security and needs to be registered with the SEC in order to be offered and sold in the U.S.
E.g., Stocks or bonds are examples of securities companies must register with the regulatory body before offering their sale. Even though the argument of “is crypto a security?” an ongoing one, the SEC has filed a complaint against FTX that its native cryptocurrency, FTT, is classified as a security since it was sold as an investment contract.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
