Taylor Swift doesn’t just write popular songs, she also has an eye for due diligence.
When the now-bankrupt crypto exchange FTX approached her about a $100 million sponsorship deal in 2021, the pop star asked them, “Can you tell me that these are not unregistered securities,” according to the lawyer leading a class action lawsuit against FTX promoters.
That attorney, Adam Moskowitz, said in an interview on the podcast The Scoop that Swift was the only celebrity to question the exchange. Her father previously worked for Merrill Lynch.
Swift’s potential partnership with FTX may have included NFT tickets and would have been one of the crypto exchange’s biggest deals, although anonymous FTX employees told the Financial Times last year, “No one really liked the deal. It was too expensive from the beginning.”
At the height of its popularity, FTX went on an advertising spending spree that included partnerships with Major League Baseball, a Formula 1 team, and an e-sports team. It also paid to emblazon its name on the Miami Heat’s home arena.
Securities, which must be registered with the Securities and Exchange Commission, are governed by the Supreme Court’s Howey Test, and they include investment contracts, the definition of which includes “when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others."
The SEC alleged in a complaint in December that FTX’s native token, FTT, was a security. In the class action lawsuit filed in November, Moskowitz accused celebrities such as Tom Brady, Gisele Bundchen, Steph Curry, Shaquille O’Neil, MLB’s David Ortiz and Shohei Ohtani, and the Golden State Warriors, of violating Florida securities and consumer protection laws—and of engaging in an illegal civil conspiracy. Moskowitz, along with accomplished lawyer David Boies, are trying to recover damages for those who lost money investing with FTX.
FTX declared bankruptcy last year after a liquidity crunch led to a crisis for the company. The company’s former CEO and founder, Sam Bankman-Fried, was charged with eight counts, including wire fraud, for allegedly mishandling customer funds. In February, a fresh indictment was handed down to the disgraced crypto founder along with two unnamed co-conspirators.
