In the world of cryptocurrencies, celebrities and digital assets have formed a peculiar partnership. Start-ups seek the endorsement of famous individuals to gain credibility and expand their audience, while celebrities have an opportunity to make money and stay on the cutting edge of internet culture. However, this relationship took a harsh hit when the cryptocurrency exchange FTX collapsed, leading to a wave of legal troubles for the celebrities associated with it.
Getting FTXed
One of the most prominent figures caught in the FTX debacle was Tom Brady, the seven-time Super Bowl-winning quarterback. As an ambassador for FTX, Brady had endorsed the exchange at conferences and in television commercials, touting it as a trustworthy institution in the world of crypto. However, as FTX faced bankruptcy and its founder, Sam Bankman-Fried, dealt with criminal fraud charges, Brady found himself in a precarious situation.
Brady had signed an endorsement agreement with FTX in 2021, receiving $30 million worth of FTX stock as payment, while his then-wife, supermodel Gisele Bündchen, received $18 million in FTX stock. Now, FTX customers have filed a lawsuit against Brady and Bündchen, seeking compensation for their losses. To make matters worse, the couple may still be liable to pay taxes on the now worthless FTX stock they received.
The case of Brady and Bündchen is just one example of the reckoning faced by celebrities who rushed to embrace cryptocurrencies during the boom times. Paris Hilton, Snoop Dogg, Reese Witherspoon, and Matt Damon, among others, all enthusiastically endorsed or invested in crypto projects, capitalising on the soaring prices and bringing mainstream attention to digital currencies. However, the crash in cryptocurrency prices in 2021 abruptly ended the celebrity crypto bonanza.
The Legal Aftermath
Several legal actions have been taken against celebrities involved in crypto endorsements. Kim Kardashian was ordered by the Securities and Exchange Commission to pay $1.26 million for inadequate disclosures in her endorsement of the EthereumMax crypto token. Lawsuits have been filed against various crypto companies, accusing them of misleading investors with the help of A-list celebrities. The likes of Lindsay Lohan, Jake Paul, Soulja Boy, and Lil Yachty have faced charges of illegally promoting crypto assets.
The aftermath of FTX’s downfall highlights the challenges faced by celebrities involved in crypto ventures. Autograph, a company co-founded by Tom Brady that focuses on selling nonfungible tokens (NFTs), has struggled as its revenue declined during the crypto meltdown. Autograph has shifted its strategy to prioritize helping celebrities build loyalty with their fans rather than marketing crypto tokens. Layoffs have also been implemented at Autograph.
FTX’s collapse not only affected celebrities but also had a significant impact on start-ups seeking their endorsements. FTX aggressively pursued celebrity endorsements, with Brady being at the top of their list. The collapse of FTX left celebrities like Katy Perry and Taylor Swift, who were in talks for partnerships, narrowly escaping potential disaster. Taylor Swift was reportedly close to a $100 million deal with FTX for a tour sponsorship but ultimately did not go through with it.
The rise and fall of celebrity crypto endorsements serve as a cautionary tale in the volatile world of cryptocurrencies. While the allure of quick and easy money may be tempting, celebrities and investors alike should approach crypto ventures with caution, ensuring proper due diligence and understanding the risks involved. The fallout from the FTX collapse and subsequent legal battles should serve as a reminder that celebrity endorsements cannot guarantee the success or legitimacy of a cryptocurrency project.