The Texas State Securities Board has reportedly expanded its investigation into cryptocurrency platform FTX’s operations and its subsequent bankruptcy to now include scrutinizing promotions by celebrities like Tom Brady and Stephen Curry.
Bloomberg News first reported the development in the investigation, which is looking at possible securities-law violations. The Texas Tribune has confirmed it.
“Anyone who renders investment advice in Texas typically needs to be registered and they typically have to truthfully disclose all known material facts,” said Joe Rotunda, director of enforcement at the Texas State Securities Board, to the Tribune. “In Texas, there is not a different system of justice or regulation for people who are celebrities.”
This comes after news broke of a class-action lawsuit being filed last week that also names Curry and Brady, among a slew of other celebrities as well as the Warriors. It was filed in Florida and also names the platform’s former CEO, Sam Bankman-Fried.
The lawsuit claims they, among others, “either controlled, promoted, assisted in, and actively participated” in the alleged scheme where they “aggressively marketed” FTX. The filing described FTX as “truly a house of cards, a Ponzi scheme where the FTX Entities shuffled customer funds between their opaque affiliated entities, using new investor funds obtained through investments in the YBAs and loans to pay interest to the old ones and to attempt to maintain the appearance of liquidity.”
The Wall Street Journal also recently reported that the U.S. Securities and Exchange Commission (SEC) and Justice Department are also investigating FTX.
Celebrities are not immune to being penalized for promoting cryptocurrency. Just last month, Kim Kardashian agreed to pay a settlement of $1.26 million to the SEC after allegations arose that she violated U.S. securities rules. The 42-year-old allegedly promoted a crypto token on her Instagram but did not reveal that it was a paid promotion. Kardashian received $250,000 for the post.
