FTX investors can drop their lawsuits against the company's co-founder and former CEO, Sam Bankman-Friedin exchange for his support.
Bloomberg reported April 19 that, under a proposed settlement, Bankman-Fried would cooperate against celebrity promoters named as defendants in a $1.3 million civil lawsuit.
The civil case currently names celebrities as defendants, including former NFL quarterback Tom Brady, former NBA player Shaquille O'Neal and model Gisele Bundchen.
The plaintiffs allege that the celebrities involved them in a Ponzi scheme by promoting FTX.
SBF would provide information
To cooperate, Bankman-Fried would have to provide plaintiffs' attorneys with details about entities linked to FTX, including venture capital firms that invested in the exchange and accountants and lawyers who worked with the company during its operations .
He would also provide non-privileged documents describing his investments in the AI company. Anthropic and an affidavit proving negative net worth.
In exchange for Bankman-Fried's cooperation, the plaintiffs would drop current and future claims against him. Bloomberg said the plaintiffs recognized Bankman-Fried's involvement as “valuable” but acknowledged the change in focus could make the outcome of their case uncertain.
The judge must decide whether or not to approve the proposal.
Past developments
The relevant case, currently pending in the Southern District of Florida, brings together several civil lawsuits against various FTX promoters and insiders.
Several other defendants had already offered settlements. A March 27 filing named FTX insiders Gary Wang, Caroline Ellison and Nishad Singh, former FTX lawyer Daniel Friedberg, several internet personalities and AFL quarterback William Trevor Lawrence as proposed settlement defendants. The current status of the proposal is unclear.
Much earlier, in April 2023some famous promoters — including but not limited to Brady and Bundchen — asked the court to dismiss the claims. The relevant case, Garrison v. Bankman-Fried et al., was integrated into the consolidated case in June 2023.
All civil cases are separate from the high-profile criminal case against Bankman-Fried, which has ended. Bankman-Fried was convicted of criminal charges in November 2023 and received a sentence 24-year prison sentence in March.