sourcegraph
May 27, 2024

Last fall, seven-time Super Bowl champion quarterback Tom Brady made an emergency call as the FTX cryptocurrency exchange collapsed.

He called Sina Nader, director of partnerships at FTX. Staff at the exchange are in a crisis meeting with its troubled founder, Sam Bankman-Fried. Mr. Nader could not answer. “I never thought I’d turn down a call from Tom Brady,” he said.

Mr Brady has reason to be concerned.As an “ambassador” for FTX, he has appeared at company conferences and on TV in the Bahamas advertise this facilitates communication “Most Trustworthy” Institutions in the loosely regulated crypto world.

His money was also threatened.as a endorsement FTX paid Brady $30 million under the agreement he signed in 2021, a deal made up almost entirely of FTX stock, three people familiar with the matter said. Brady’s wife at the time, supermodel Gisele Bündchen, received $18 million worth of FTX stock, one of the people said.

Now that FTX is bankrupt, Mr. Bankman-Fried faces criminal fraud charges. Mr. Brady, 45, and Ms. Bündchen, 42, are being sued by a group of FTX clients seeking compensation to celebrities who support the exchange. On top of that, the terms of the deal will require the ex-couple, who divorced last year, to pay taxes on at least some of their now worthless FTX stock, two people familiar with the endorsement deal said.

Their situation is the most dramatic example of the reckoning of shame faced by actors, athletes and other celebrities, eager to embrace the easy money and online hype of cryptocurrencies. Paris Hilton, Snoop Dogg, Reese Witherspoon and Matt Damon all gushed about the boom times Or invest in crypto projects that bring mainstream audiences into the wacky world of digital currencies. It’s fun and lucrative when prices are skyrocketing.

But last year’s crash ended the celebrity cryptocurrency boom.

In October, the SEC ordered Kim Kardashian to pay $1.26 million for failing to make adequate disclosures about her support for the EthereumMax crypto token. In December, a California attorney sued two cryptocurrency firms, MoonPay and Yuga Labs, accusing them of using “a vast network of A-list musicians, athletes, and celebrity clients” to mislead investors about digital assets.

In March, the SEC charged actress Lindsay Lohan, online influencer Jake Paul and musicians including Soulja Boy and Lil Yachty for illegally promoting crypto assets.In late May, after months of failed attempts, the process server delivery of court documents Retired basketball star Shaquille O’Neal has been indicted for promoting FTX, according to legal documents. Mr. O’Neill received his services during a live broadcast of the NBA playoffs.

Representatives for Mr. Brady, Mr. Bankman-Fried and MoonPay declined to comment. A spokesperson for Yuga Labs said the company “has never paid celebrities to join the club.” Representatives for Ms. Bundchen and Mr. O’Neill did not respond to requests for comment.

Tech startups and celebrities have long had a symbiotic relationship. These start-ups offer stars a way to make money while remaining at the forefront of internet culture. Celebrities help young companies gain credibility and reach a larger audience.

Of all the startups recruiting celebrities to endorse cryptocurrencies, FTX is perhaps the most enthusiastic. Nader, a former FTX executive, recalls that when Mr. Bankman-Fried was trying to make FTX a household name, he drew up a list of celebrities he could envision promoting the company. Mr. Brady’s name is at the top.

Mr. Nader, a former college football player, was responsible for recruiting Mr. Brady and other stars. June 2021, Mr. Brady and Ms. Bundchen agree to an agreement Join Mr. Bankman-Fried in applauding the “revolutionary FTX team.” Nader said Brady appeared to be genuinely interested in cryptocurrencies and had spoken to Bankman-Fried occasionally.

“Imagine a tiger talking to a lion,” Mr Nader said. “They’re slightly different, they do different things, but they’re really strong in their field.”

In 2021, Mr. Brady also co-founded Autograph, a company that helps celebrities sell encrypted collectibles known as non-fungible tokens (NFTs). Autograph raises more than $200 million from investors, and Mr. Bankman-Fried joins the board.

In the same year, Mr. Brady and Ms. Bundchen starred FTX’s $20 million ad campaign airs ads during NFL games.Mr. Brady also posted vibrato video Along with Mr. Bankman-Fried from FTX’s Bahamas headquarters, he spoke at a conference in front of hundreds of people. Backstage, Mr. Bankman-Fried said he could imagine buying a football team with Mr. Brady one day. Ms. Bündchen also participated as Head of Environmental and Social Initiatives at FTX.

When FTX collapsed last November, the company’s $32 billion valuation (including the $48 million in stock held by Mr Brady and Ms Bündchen) plummeted to zero. The couple also received small amounts of ethereum, bitcoin and Solana tokens that could be traded on the platform, but those tokens disappeared after FTX went bust, according to a person familiar with the matter.

Mr. Brady has not publicly commented on FTX or his relationship with Mr. Bankman-Fried. After the FTX crisis meeting in November, Nader called him back.

“He was concerned,” Mr. Nader said. “The first thing he asked me was: ‘Sina, how are you? I know you put your heart and soul into it.'”

Ms Bundchen said in a speech in March interview Vanity Fair said she “believed the hype” and was “caught off guard”.

Another of Mr. Brady’s cryptocurrency ventures is also in trouble. Autograph’s revenue fell last year due to the cryptocurrency crash, a person familiar with the matter said. The startup has shifted its strategy to focus more on helping celebrities find ways to build fan loyalty rather than marketing crypto tokens to consumers, the person said. It has also removed some cryptographic language from its marketing and downplayed terms like NFT, another person with knowledge of the company said.

Autograph has also let go of more than 50 employees as part of the layoffs, a third person said.Decreases were reported earlier insider. An Autograph spokesman declined to comment.

Mr. Brady also faces legal trouble. In December, attorney Adam Moskowitz and the law firm of Boies Schiller Flexner filed a lawsuit in Florida federal court accusing him and Bündchen of misleading investors. Other defendants include comedian Larry David, NBA star Stephen Curry and tennis player Naomi Osaka, all of whom support FTX.

“Neither of these defendants conducted any due diligence prior to marketing these FTX products to the public,” the lawsuit said.

Some celebrities have gotten away with the cryptocurrency chaos. Pop star Katy Perry had held talks with FTX about a partnership, but that never materialized, three people familiar with the matter said.

Last spring, Taylor Swift discussed a deal with FTX that could pay as much as $100 million, according to two people familiar with the matter. Tour sponsorship was on the table after Swift turned down other promotional offers, a person familiar with the negotiations said.The size of the deal was reported earlier FT.

Mr. Moskowitz say on the podcast In April, Ms. Swift conducted due diligence on FTX, requiring the exchange to certify that its cryptocurrencies were not unregistered securities.his comment sparked a barrage of headlines About Ms. Swift’s business acumen. But Moskowitz said in an interview with The New York Times that he had no inside information about the talks.

Indeed, Ms. Swift’s party signed a sponsorship deal with FTX after more than six months of discussions, while Bankman-Fried pulled out, three people familiar with the matter said. The last-minute reversal left Swift’s team frustrated and disappointed, two people familiar with the matter said.

A spokesman for Ms. Swift declined to comment.



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