When the FTX cryptocurrency change imploded final fall, Tom Brady, the seven-time Tremendous Bowl-winning quarterback, made an pressing name.
He known as Sina Nader, FTX’s head of partnerships. Trade employees had been in the course of a disaster assembly with beleaguered founder, Sam Bankman-Fried. Mr. Nader couldn’t reply. “I by no means anticipated to show down a name from Tom Brady,” he stated.
Mr. Brady had causes to be involved. As an “ambassador” for FTX, he had appeared on the firm’s convention within the Bahamas and on TV commercials that promoted the change as “the most trusted” establishment within the loosely regulated world of crypto.
His cash was additionally at stake. As a part of a recommendation In line with the deal Mr Brady signed in 2021, FTX had paid him $30 million, a deal made up nearly completely of FTX inventory, three individuals with data of the contract stated. Mr. Brady’s then-wife, supermodel Gisele Bundchen, was paid $18 million in FTX inventory, one of many individuals stated.
Now FTX is bankrupt and Mr. Bankman-Fried is accused of fraud. Mr Brady, 45, and Ms Bündchen, 42, have been sued by a bunch of FTX shoppers looking for compensation from the celebrities who endorsed the change. As well as, underneath the phrases of the deal, the previous couple, who divorced final yr, can be required to pay taxes on at the very least a portion of their now nugatory FTX shares, two individuals conversant in the endorsement deal stated.
Their state of affairs is the high-profile instance of a humiliating reckoning with which the actors, athletes and different celebrities rushed to embrace the straightforward cash and on-line hype of cryptocurrencies. In the course of the increase, Paris Hilton, Snoop Dogg, Reese Witherspoon and Matt Damon all flocked or invested in crypto initiatives, bringing a mainstream viewers to the shaky world of digital currencies. It was enjoyable – and profitable – whereas costs skyrocketed.
However final yr’s crash ended the movie star crypto bonanza.
In October, the Securities and Trade Fee ordered Kim Kardashian to pay $1.26 million for failing to make enough disclosures when she accepted the EthereumMax crypto token. In December, a California legal professional sued two crypto firms, MoonPay and Yuga Labs, accusing them of utilizing a “large community of high musicians, athletes, and movie star shoppers” to mislead buyers about digital property.
In March, the SEC charged actress Lindsay Lohan, on-line influencer Jake Paul, and musicians together with Soulja Boy and Lil Yachty with illegally selling crypto property. And on the finish of Could, after months of failed makes an attempt, a course of server court papers delivered to Shaquille O’Neal, the retired basketball star, who was charged with selling FTX, in keeping with authorized paperwork. Mr. O’Neal was served whereas broadcasting a Nationwide Basketball Affiliation playoff sport.
Representatives of Mr. Brady, Mr. Bankman-Fried and MoonPay declined to remark. A spokeswoman for Yuga Labs stated the corporate had “by no means paid a star to affix the membership.” Representatives for Ms. Bündchen and Mr. O’Neal didn’t reply to requests for remark.
Tech start-ups and celebrities have lengthy had a symbiotic relationship. The beginning-ups supply stars a strategy to earn a living whereas staying on the slicing fringe of web tradition; the celebrities assist younger firms achieve credibility and attain a bigger viewers.
Of all of the startups that recruited celebrities to endorse crypto, FTX was maybe probably the most enthusiastic. Whereas attempting to make FTX a family identify, Mr. Bankman-Fried made a listing of celebrities he might think about selling the corporate, Mr. Nader, the previous FTX government, recalled. Mr. Brady’s identify was on the high.
mr. Nader, a former faculty soccer participant, was in command of recruiting Mr. Brady and different stars. In June 2021, Mr. Brady and Mrs. Bündchen agreed to a deal with Mr. Bankman-Fried, praising the “revolutionary FTX crew”. Mr. Brady appeared genuinely considering crypto, Mr. Nader stated, and had occasional conversations with Mr. Bankman-Fried.
“Think about a tiger and a lion speaking,” Mr. Nader stated. “They’re barely completely different, they do various things, however they’re actually formidable in their very own arenas.”
In 2021, Mr. Brady additionally co-founded Autograph, which helps well-known individuals promote the crypto collectibles often known as non-fungible tokens or NFTs. Autograph raised greater than $200 million from buyers and Mr. Bankman-Fried joined the board.
That very same yr, Mr. Brady and Mrs. Bündchen with star in a $20 million advert marketing campaign for FTX, with commercials operating throughout NFL video games. Mr. Brady additionally posted TikTok Videos with Mr. Bankman-Fried from FTX’s headquarters within the Bahamas, the place he spoke to a whole bunch at a convention. Backstage, Mr. Bankman-Fried remarked that he might envision shopping for a soccer crew with Mr. Brady sooner or later. Ms. Bündchen additionally appeared on the convention as FTX’s head of environmental and social initiatives.
When FTX collapsed final November, the corporate’s valuation plummeted from $32 billion — together with Mr. Brady and Ms. Bündchen’s $48 million price of shares — to zero. The pair had additionally acquired a small quantity of Ethereum, Bitcoin and Solana tokens to commerce on the platform, stated one of many individuals who disappeared in FTX’s chapter.
Mr. Brady has not publicly commented on FTX or his relationship with Mr. Bankman-Fried. After FTX’s disaster assembly in November, Mr. Nader known as him again.
“He was frightened,” Mr. Nader stated. “The very very first thing he requested me was, ‘Sina, how are you? I do know you set your coronary heart and soul into this.’”
stated Mrs. Bündchen in March interview with Self-importance Honest that she had “trusted the hype” and felt “blindsided.”
Mr. Brady’s different crypto enterprise has additionally struggled. Autograph revenues fell final yr amid the crypto disaster, an individual conversant in finance stated. The startup has shifted its technique to focus extra on serving to celebrities discover methods to foster loyalty amongst their followers, and fewer on advertising crypto tokens to customers, the particular person stated. The corporate has additionally eliminated some crypto language from its advertising and downplayed phrases like NFT, one other particular person with data of the corporate stated.
Autograph additionally laid off greater than 50 staff in rounds of layoffs, a 3rd particular person stated. The reductions had been beforehand reported by Insider. An Autograph spokeswoman declined to remark.
Mr. Brady has additionally confronted authorized troubles. In December, Adam Moskowitz and the legislation agency of Boies Schiller Flexner filed a lawsuit in Florida federal court docket accusing him and Ms. Bündchen of deceptive buyers. Different defendants embody comic Larry David, NBA star Steph Curry and tennis participant Naomi Osaka, all of whom supported FTX.
“None of those defendants performed any due diligence previous to advertising these FTX merchandise to the general public,” the lawsuit stated.
Some celebrities narrowly escaped the crypto mess. Katy Perry, the pop star, has had talks a few partnership with FTX that by no means materialized, three individuals conversant in the state of affairs have stated.
Within the spring of final yr, Taylor Swift mentioned a cope with FTX that would have raised as a lot as $100 million, two individuals conversant in the matter stated. A tour sponsorship was on the desk after Ms Swift declined different promotional choices, an individual with data of the talks stated. The dimensions of the deal was beforehand reported by The Financial times.
mr. Moskowitz, the lawyer suing the celebrities, said on a podcast in April that Ms. Swift had carried out due diligence on FTX and requested the change to show that her cryptocurrencies weren’t unregistered securities. His feedback sparked a flurry of headlines about Ms. Swift’s enterprise acumen. However in an interview with The New York Occasions, Mr. Moskowitz stated he had no prior data of the talks.
In actuality, Ms. Swift’s aspect signed the sponsorship cope with FTX after greater than six months of discussions, three individuals with data of the deal stated, and it was Mr. Bankman-Fried who backed out. The last-minute reversal left Ms. Swift’s crew annoyed and upset, two of the individuals stated.
A spokeswoman for Ms Swift declined to remark.
