BlockFi Files for Bankruptcy as FTX and Star Endorsers Named in Lawsuit

Posted on December 1st, 2022 at 3:13 PM
BlockFi Files for Bankruptcy as FTX and Star Endorsers Named in Lawsuit

From the Desk of Jim Eccleston at Eccleston Law.

BlockFi, a major cryptocurrency lender, has filed for bankruptcy.
BlockFi had paused client withdrawals due to uncertainties with FTX, as the two are closely tied together. FTX provided BlockFi with a $400 million revolving credit line in July, which was accompanied by an option to purchase the company. The meltdown and subsequent bankruptcy of FTX has had a widespread impact across the crypto industry. For example, FTX CEO Sam Bankman-Fried was set to purchase Voyager Digital, which had filed for bankruptcy, for $1.4 billion. However, Voyager Digital now is struggling to find a new buyer for the company’s assets.

While FTX and former CEO Sam Bankman-Fried recently were sued by an investor for allegedly targeting “unsophisticated investors”, several celebrity endorsers have additionally been named in the lawsuit, including Tom Brady, Stephen Curry, and Shaquille O’Neal. According to the complaint, FTX violated securities laws by enrolling investors in yield-bearing FTX crypto accounts, which allegedly constitute unregistered securities. Garrison’s complaint further alleges that FTX utilized celebrities to promote the company’s unregistered securities and attract investors into a Ponzi scheme. Brady and his then-wife Gisele Bundchen, who also was named in the suit, filmed a commercial named “FTX. You In?” which portrayed the couple encouraging acquaintances to join the platform, according to the complaint. However, FTX’s bankruptcy will impact the lawsuit.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, law, ftx

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