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FTX Investors Consider Dropping Claims Against Co-Founder

FTX investors are contemplating dropping claims against the company’s co-founder and former CEO, Sam Bankman-Fried, in exchange for his cooperation and support.

Bloomberg reported on April 19 that, as part of a proposed settlement, Bankman-Fried would assist in the case against celebrity promoters who are defendants in a $1.3 million civil lawsuit.

The civil lawsuit currently names celebrities such as former NFL quarterback Tom Brady, former NBA player Shaquille O’Neal, and supermodel Gisele Bundchen as defendants.

Plaintiffs claim that the celebrities played a role in enticing them into a Ponzi scheme by endorsing FTX.

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SBF to Provide Information

As part of his cooperation, Bankman-Fried would be required to furnish plaintiffs’ lawyers with extensive details regarding entities associated with FTX, including venture capital firms that have invested in the exchange and professionals like accountants and lawyers who have worked with the company.

Furthermore, he would need to disclose nonprivileged documents outlining his investments in the AI company Anthropic and provide an affidavit confirming his negative net worth.

In return for Bankman-Fried’s assistance, the plaintiffs would agree to drop existing and future claims against him. While acknowledging Bankman-Fried’s valuable participation, the plaintiffs recognize that this shift in focus could introduce uncertainty regarding the case’s outcome.

A final decision on the proposal rests with the judge.

Recent Developments

The ongoing case, presently being litigated in the Southern District of Florida, consolidates multiple civil suits against various FTX promoters and insiders.

Several other defendants have already indicated a willingness to settle. A recent filing on March 27 identified FTX insiders Gary Wang, Caroline Ellison, and Nishad Singh, former FTX lawyer Daniel Friedberg, various internet personalities, and AFL quarterback William Trevor Lawrence as defendants proposing settlements. The current status of this proposal remains uncertain.

Earlier in April 2023, certain celebrity promoters, including notable figures like Brady and Bundchen, sought the court’s dismissal of claims. Subsequently, the case, Garrison v. Bankman-Fried et al., was merged into the consolidated proceedings by June 2023.

It is important to note that all civil cases referenced in this article are separate from the prominent criminal case involving Bankman-Fried, which has already concluded. Following his criminal conviction in November 2023, Bankman-Fried was sentenced to 24 years in prison in March.

Further References

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