- The lawsuit alleges that the Warriors falsely promoted FTX to attract investors.
- Sam Bankman-Fried and Caroline Ellison are named among the defendants.
- The lawsuit is seeking damages on behalf of non-U.S. FTX users.
Reuters reported on Monday that an FTX customer had filed a proposed class action lawsuit against the basketball club in a federal court in San Francisco. The FTX customer said that the current NBA champions falsely promoted the bankrupt cryptocurrency company.
Elliott Lam, a Canadian who lives in Hong Kong, has filed a proposed class action lawsuit. He has also named as defendants Sam Bankman-Fried, the founder and former CEO of FTX, and Caroline Ellison, the former head of Bankman-Fried’s trading firm, Alameda Research.
Last December, the Warriors announced a “first of its kind” cryptocurrency partnership with FTX, making it the official cryptocurrency platform of the team. Lam said that the defendants lied about FTX being a “viable and safe way to invest in crypto” in order to get the attention of investors.
Lawsuit Seeks to Recover Damages for Non-U.S. Residents
The lawsuit is filed on behalf of non-U.S. residents who have FTX yield-bearing accounts. It marks an effort to recover damages under California’s consumer protection laws. Lam claims to have lost $750,000 in the cryptocurrency exchange’s collapse.
The suit further claimed that the Warriors were aware of FTX’s wrongdoings. It states that the reigning champions knew, or should have known, that their collaboration with the now-embattled corporation was dishonest and fraudulent.
Additionally, the Warriors are a defendant in a lawsuit filed in Miami on November 16 by American FTX users. This group wants compensation from prominent celebrities who have promoted FTX. The list includes the Warriors’ Stephen Curry, quarterback Tom Brady, comedian Larry David, and tennis star Naomi Osaka.
As CNBC reported at the time, as part of the Warriors’ partnership with FTX, the exchange has agreed to pay the club $10 million in December 2021. In the agreement, FTX received rights to the team’s NFTs, brand placements with the club’s G League and NBA 2K esports teams, and in-arena signage at the Chase Center.
On the Flipside
- Lam’s class action complaint is timed just after the Warriors said they would halt all FTX-related advertising.
Why You Should Care
After FTX filed for U.S. bankruptcy protection last week, industry experts told Reuters on Monday that sports teams and companies may be hesitant to get into long-term relationships with crypto firms in an effort to minimize risks.
FTX’s demise was one of the most reported crypto disasters in history. Traders withdrew $6 billion from the platform in just 72 hours, and rival exchange Binance backed out of a plan to help. The news spread quickly through the sports industry, where the exchange has a big presence. Many sports teams ended their deals with the exchange.
Read more about the FTX downfall and its impact in the sports world:
Top Esports Organization TSM Suspends $210M Naming Rights Deal with FTX
FTX Contagion In Sports: Teams And Athletes Rush To Terminate FTX Deals