FTX YouTube Influencers Sued in a Class Action Seeking $1B in Damages

A class action lawsuit was filed on March 15 against popular finance YouTubers based in the US, Australia, and Japan, for promoting FTX, which filed for bankruptcy last November.

Ben Armstrong, the creator of BitBoy Crypto, Graham Stephan, a YouTuber with 4 million subscribers, and Andrei Jikh are among the ten defendants mentioned in the suit, which also accused Creators Agency, a management and digital art network.

Edwin Garrison, a private investor from Oklahoma, who claims to have invested in FTX’s yield-bearing accounts (YBA) driven by the defendants’ misrepresentations, led the suit.

Garrison brought a similar case mid-November before the Federal court’s Florida Miami Division against celebrities including basketball star Steve Curry, Shark Tank’s Kevin O’Leary, tennis player, and then-FTX brand ambassador Naomi Osaka, among others, for ‘‘targeting unsophisticated investors’’ with false information amounting to a sale of unregistered FTX securities.

Failing to disclose payments for the promotions

The latest suit also accuses the defendants of not disclosing the amount of money they received for the promotions, according to the Federal Trade Commission guidelines, which requires that influencers disclose what they are paid in promotions for investors to assess whether there is biasness in their reviews.

‘‘Though FTX paid defendants handsomely to push its brand and encourage their followers to invest, Defendants did not disclose the nature and scope of their sponsorships and endorsement deals, payments, and compensation, nor conduct adequate due diligence,’’ the filing, dated March 15, read.

In a separate case between Kim Kardashian and the Securities and Exchange Commission (SEC) in October, the socialite parted with $1.26 million for receiving $250,000 to promote EthereumMax, a token based on Ethereum.

Concerning the case, the SEC chair Gary Gensler said: ‘‘This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto-asset securities, it does not mean that those investment products are right for all investors.’’

Furthermore, Garrison and his fellow plaintiffs claim that FTX could not have risen to the levels it did were it not for the promotions by the accused, ‘‘who hyped the Deceptive FTX platform for payments ranging from tens of thousands of dollars to multimillion-dollar bribes.’’ FTX went bankrupt last November after failing to meet customer withdrawals, later leading to the arrest of its founder Sam Bankman-Fried and his lieutenants.