The failure of the cryptocurrency exchange FTX has resulted in yet another lawsuit, this time against financial influencers who promoted the trading platform on YouTube.
Plaintiff Edwin Garrison filed a $1 billion class action on March 15 in the Southern District of Florida, Miami Division, claiming that YouTubers should be liable for marketing FTX during its peak.
Kevin “Meet Kevin” Paffrath, Graham Stephan, Andrei Jikh, Brian Jung, Jeremy “Financial Education” Lefebvre, Tom Nash, Ben “BitBoy Crypto” Armstrong, and Erika Kullberg were named in the complaint by private investor Garrison.
In addition to former FTX CEO Sam Bankman-Fried, famous marketers such as NFL star Tom Brady are also mentioned in the complaint.
In the class action, the defendants are described as “influencers” who represent themselves as consumers and provide their followers with essential and authentic information.
The lawsuit states, “Although FTX paid Defendants handsomely to promote its brand and encourage their followers to invest, Defendants did not disclose the nature and scope of their sponsorships and/or endorsement deals, payments, and compensation, nor did they conduct adequate (if any) due diligence.”
According to the Federal Trade Commission’s (FTC) standards for social media influencers, creators must disclose when they get compensation for advocating a product.
Seven plaintiffs from various nations say they acquired unregistered security from FTX as a yield-bearing account (YBA). The plaintiffs claim they sustained damages by achieving this unregistered security, which the defendants pushed for their own or FTX’s financial advantage.
The Moskowitz Law Company, representing the plaintiffs, said that the case combines various class-action lawsuits. Moreover, Garrison is a plaintiff in a second class-action lawsuit against claimed celebrity FTX endorsers.
In response to YouTuber Stephen Findeisen, a.k.a. Coffeezilla, one of the suspected promoters, Kevin Paffrath, said that he was not liable for the losses sustained by FTX investors. Nonetheless, Paffrath indicated that he was prepared to collaborate with the complainant.
“I’d be pleased to work with them as a charity, but let’s be clear about it. That is a lack of accountability,” he remarked.
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