FTX Investors Add MLB and Formula 1 to Class-Action Lawsuit

Investors who lost billions of dollars in the collapse of cryptocurrency exchange FTX have reportedly expanded their legal action to include Major League Baseball (MLB), Formula 1 racing, and Mercedes-Benz Group AG’s racing team.

The investors allege that these entities aided and abetted the fraud orchestrated by FTX, adding to the existing class-action suit that already includes celebrity promoters, Bloomberg reported Tuesday (Nov. 28).

FTX faced a meltdown that resulted in investors losing at least $11 billion and the company’s founder, Sam Bankman-Fried, was convicted of fraud and conspiracy on Nov. 2, according to the report.

In response, investors have filed a class-action lawsuit against FTX and its celebrity promoters, claiming that they played a role in facilitating the fraudulent activities, the report said.

MLB was the first major sports league to sign a promotional deal with FTX in 2021, and at one point, MLB umpires wore FTX patches on their sleeves, per the report. Formula 1 and Mercedes-Benz also had promotional deals with FTX, with the racing team featuring FTX logos on its cars.

Investors allege that these partnerships helped promote the sale of unregulated securities through FTX, according to the report.

The addition of MLB, Formula 1 and Mercedes-Benz to the class-action suit expands the list of defendants, which already includes more than two dozen celebrity promoters who endorsed FTX, the report said. Tom Brady, Shohei Ohtani and Steph Curry are among the celebrities accused of ignoring red flags about FTX’s business practices.

The celebrity endorsers have argued in court filings that the investors’ claims are baseless because their advertisements and sponsorships did not explicitly encourage individuals to deposit money into FTX accounts, per the report. They also said that they had no involvement in FTX’s misappropriation and mismanagement of funds.

It was reported on Nov. 7 that Bankman-Fried’s conviction in what has been called one of the largest frauds in U.S. history could add momentum to the class-action lawsuit against the celebrity spokespeople who promoted his platform.

Plaintiffs in the case “are going to benefit mightily from the investigative work of the government,” Daniel Richman, a professor at Columbia Law School, told Bloomberg at the time.