Tom Brady, Giselle Bündchen, Larry David Sued in FTX Class Action Suit
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The Larry David and Steph Curry ads are pretty tame, IMHO, but the Tom Brady ads are over the top extreme and directly connect his persona and fame to push FTX. It is extremely easy to see how effective these ads would have been to induce FOMO and cause many average people to "get in", and I think if a jury sees these videos back to back, they will be very sympathetic to the plaintiffs.
If there is some indication they knew it was a scam, then sure go after them. But you can't just seize everyone's emails because you think there's a chance they were involved. You need probable cause.
Probably not solid legal advice even in a trivial case such as this, but would be so funny to watch.
I do think people should be generally accountable for what they promote. Otherwise there is an open loop, where individuals and companies can get the upside without a corresponding downside of accountability. That inherently unbalanced the scales, which is a bad incentive.
Medical decisions shouldn’t be based on actors attractiveness… it should be based on efficacy and safety.
Fraud is not protected by the First Amendment [1]. This is old law.
Mercedes' Formula 1 car had like 6 FTX ads on it this season. Why isn't Mercedes or Lewis Hamilton in this class action?
I'm not sure it's a good idea, but it's an interesting idea. And the follow on effects of making endorsements things that people actually believe in would be a nice world.
I assume Mercedes/Lewis Hamilton weren't included because the lawyers went by whoever did it on the superbowl. Cause it was an easy list to find. And a lot of Americans don't know anything about F1 so it's under the radar.
Fraud was used by me as an example of the 1st amendment being okay with certain commercial speech being actionable.
In the "anonymous actor" situation, they are not trying to use someone's brand/honor so the perverse incentives don't appear to be present.
Of course. Nobody is sending them to jail. But at the very least, their earnings should go the victims. (Analogy: if your employer perpetuates fraud, they go to jail and you lose your job.)
My previous earnings aren’t taken. None of the contractors that did work for the company get their payments clawed back.
You don't have to give your paycheck back though.
You may if you’re senior enough. Public figures pushing nonsense are in positions of influence. It’s mind blowing that an emerging opinion on this forum is the beneficiaries of fraud should be immune from consequences.
We have centuries of case law on this. If I lose money in a fraud, you can be sure as hell I’ll sue everyone who took cash out. Naïveté is not an excuse for misconduct.
We aren’t the first generation asking these questions. Most of this is settled law. Profiting from perpetuating fraud generally involves clawbacks. Where the thresholds lie is a matter for courts. But everyone involved will be drawn into that process. If you find that distasteful, consider whether you are profiting from fraud.
While it’s true that these are old questions, it simply is not settled law that claws back money from employees who worked at a company doing wrong but didn’t perpetuate the fraud themselves.
So, the answer to my question might be that you acquired a misunderstanding of the law at some point. You also believed that most people in HN are versed in this area of business law so expected them to see this your way.
Nope. If they were aware, that’s criminal. If they were bystanders, that’s just tough luck. We are discussing liability.
Promoters have been held responsible for fraud, particularly around securities promotion, for over a century. This isn’t arcane law. It’s commonsensical for anyone not making their living peddling fraud.
it seems there is some conflation between a "brand ambassador" and someone hired to film a commercial.
if someone takes direct interest as payment for filming something, and they further go out and endorse it, then they are a brand ambassador.
if someone gets paid once for doing a job (or some residual per play), but nothing further, that sounds like payment for hire.
Though I can see taking whatever cash payments they got back, if it rightfully belongs to scammed customers.
What? No. Kardashian was fined because she advertised crypto without disclosing she was paid for the ad. Presumably these celebrities already made those disclosures, or it's understood since everyone knows TV ads are paid.
But Tom Brady owns his own crypto/nft scam company (autograph.io), so I wouldn't be surprised if he knew it was a money grab.
I also won't be surprised if he faces charges for it down the road.
He does this by using his celebrity power, as well as bringing in other big athletes (tiger woods for example) to pump up artificial demand for junk NFTs. I also think that the NFTs they sell are designed to be confusing, and the buyer probably doesn't know what they're (not) buying in many cases... although this is probably true for all NFTs.
This may all be legal now, but I think he's playing with fire. When people engage in greed fueled schemes like this, chances go up that they have engaged in actual fraud.
IMO what he's doing here is more crooked than his FTX involvement already.
If I put my money into ftx because I saw Tom Brady hawking it that's on me. But to say that Tom is without responsibility ignores human nature. Celebrities get paid millions to endorse products because it demonstrably short-circuits our decision-making process.
Edit: to be clear I speak entirely on the moral/ethical side of the question. For better or worse the legal system doesn't legislate mortality.
If Larry David promotes a crypto exchange, my expectation is:
1.) Larry David doesn't know how crypto works, and very likely thinks it's stupid
2.) Larry David doesn't understand the additional layer of what a crypto exchange is
3.) Larry David doesn't have any opinion regarding which crypto exchange to use. He definitely doesn't know internals wrt how much of a reserve the exchange is keeping, and whether the coins with which they're backing other coins are reputable
If I lose money with this exchange, I place 0 blame on Larry David.
We all ought to be rational. We're not.
They’re entertainers, their contributions should be judged on entertainment value; the auditors should be the ones judged on audit quality.
If an auditor had raised flags and Tom and Larry went on to promote it knowing that, that’s a totally different story. But no-one knew, that’s kinda the whole problem.
This isn't like "washing hands is a good hygiene practice". Crypto is controversial, I can't throw a rock without hitting ten finance processionals that have ten contradictory opinions. Someone who doesn't know what they're talking about should stay in their lane and not spout crap they don't understand about stuff that has a major impact on people's finances. And if they do, then they own the consequences.
I don't know if it's legal, but let's say it is: are we ok with celebs endorsing gambling? I sure as hell am not, I don't care what the auditors say about the solvency of the platform.
The populous will be much better served by learning how to look at a bunch of actors* making a bunch of conflicting statements about a topic and gauging the net ground truth themselves than simply relying on the government to be the divine truth-tellers without question.
When they get bit here and there and lose some money, that's a pretty important lesson in returns too good to be true.
*Hewitt-Bishop, not David-McConaughey
If you're going to tell me you're any kind of "governance" advisor to a company that defrauded people to the tune of billions, I am not going to pretend you are somehow not partially liable.
People endorsing products have zero inputs in the decision making processes that lead to these meltdowns so I don’t really see how they can be held accountable.
Or the marketing person who created / managed an Instagram campaign?
Or the IT staff who setup notebooks and a VPN/firewall?
None of these (or many others) was even involved in the core product or are expected to know anything about financial regulations.
There is a reason that usually only senor leadership is involved in such suits.
There are exceptions to that rule of course
Does anyone have any litigation history on "celebrities endorsing something that turns out to be a fraud"?
I would think they wouldn't end up having to pay much, if anything. Their lawyers would argue "Hey, you made your own decisions! Don't blame it on Steph!"
But I would predict they make a token payment and get dismissed from the suit. Just a guess.
Edit: I don't disagree with any of the answers. I'm just curious as to whether this has ever happened before. I think "sue everyone who has any money" is the plaintiff philosophy here.
Otherwise - I'm not sure how this would really ever work. Will commercial directors and producers also be found liable? What if you endorse something like a normal Visa credit card and then three years later there is a scandal at Visa? What if FTX just lost 3% of customer funds? What due diligence could Giselle really have done? FTX was invested in by respected VC and SBF was featured positively in Forbes and the traditional media.
https://www.jonesday.com/en/insights/2013/12/sec-lifts-longt...
If the spokesperson is completely hoodwinked, what then?
The buyer pretty much has to know that these kinds of investments are essentially 3 Card Monte.
As for being hoodwinked, then still hold them to a fault. Some people might find that unjust, but again, it would force people to try to think, behave, and act more responsibly (or else face repercussions). Otherwise, people could always just play the naivety card, akin to "I didn't know the law, so I shouldn't be penalized for breaking it". Arguably, if you enable such, then society can become a race to the bottom in zero accountability and all that comes with it. Hence why some people think that a part of being a responsible adult, means owning up to your mistakes, even if you didn't know any better.
Actors tend to have agents for the very due diligence reason under discussion.
Hammer the agents for professional malpractice if the agents don't suss out the scam.
Let me also add that, holding someone to a fault doesn't necessarily mean to the same degree. Innocence isn't necessarily a black and white matter, and you can always adjust the punishment to fit the crime.
Anyhow, certainly the most innocent people here, are taxpayers not whatsoever involved in the matter, especially those who have been exclaiming about the dangers of crypto for reasons such as this. They should not be the ones forced to pay.
A brand ambassador should be a famous face of a legit auditing practice. Anything less is accepting bullshit into the system… if the system is designed for large numbers of people to take your advice then the system should hold you accountable if the advice is wrong / poorly researched.
A week later these chumps feel as stupid as they are hungry. Their only way out is to repeat the fraud. When they find some newcomers stupid enough to swap food for shells they as culpable as the original fraudster. Legally, does it matter if they knew that the shells were worthless junk? If they got triple their food ration back by exiting their shell position in a deal with someone even more stupid then they were, is it worse?
We push the original fraudster into the volcano because their very first action was to quit the shell economy. You can argue that anyone else who exited should be proportionally liable. In fact, you could take it as a given that everyone would have exited at some point. They’re all going to get hungry and eventually angry, especially when they see the fraudsters gorging themselves on all that food. You can therefore quantify peoples immorality, guilt, and liability not by how much they exited with — be that food rations or USD — but by how many shells they held over the lifetime of the scheme.
The original fraudster held all the shells at one point and gets the biggest sentence and pays the biggest damages. Everyone else is liable on a sliding scale based on how much they invested.
If Larry David took a cash fee for some acting then that’s fine. If he got any FTT out of this, he’s on the hook. If you’ve ever bought into a scam coin, so are you.
If you persuaded the vet to fix little Mittens in exchange for some shitcoin are you demonstrating you are a true and moral believer in the value of this asset, or are you just immorally passing the bag in a novel way? I’m going with the latter.
https://upload.wikimedia.org/wikipedia/commons/2/29/Yap_lice...
The problem with these new currencies is that the people proposing them offer nothing of substance other than fear — the fear of missing out.
IMO selling shitcoins is a much more difficult prosecution than ripping off customer deposits.
This is an insane suit and is hopefully thrown out right away.
I will say it again, absurd.
If you make money peddling a fraud, you’re liable. This is old law. Whether they have liability beyond their earnings is up for debate. But that there is liability is settled.
I don't see much of a case unless plantants can prove the defendants were aware of the fraud. This seems unlikely.
None of these celebs will face any legal trouble because they rightly aren't responsible for the companies they shilled for. If you were able to perform true due diligence before endorsing a product or service, you wouldn't see any recognizable faces in advertising.
That said, it would seem extremely weird to me to sue one of the extras in that commercial. They basically did the same thing, try to persuade people to use FTX, as the celebrities. Why is it wrong for famous rich people to do something but okay for non-famous to do it?
It's not, but I am guessing they are targeting those with money, not the broke extras.
If the actors know enough to know something is a scam, then they are in the wrong, too.
Regarding due diligence, anybody who accepts money to lend their name’s credibility to a product ought to do a lot of due diligence if they don’t want their name sullied. Or they don’t care about their name, or they shouldn’t sell their name.
If you’re shilling securities, yes.
I still think it's tamer than some of the others, but you make a good point.
Unless a lawyer pops up with reasons that this might have merit it’s better to just ignore instead of speculate, because it’s essentially just advertising the lawsuit.