STORY: The fallout from the collapse of crypto exchange FTX has caught up with a number of celebrities.
Among them, NFL quarterback Tom Brady, tennis star Naomi Osaka, NBA’s Golden State Warriors, as well as comedian Larry David, the creator of TV series “Seinfeld” and “Curb Your Enthusiasm”.
Court papers show they’re being sued for promoting the exchange.
The lawsuit claims they engaged in deceptive practices to sell FTX yield-bearing digital currency accounts.
And it alleges these accounts were unregistered securities that were unlawfully sold in the United States.
The proposed class action filed on Tuesday night in Miami is seeking damages from them, as well as FTX founder Sam Bankman-Fried.
The case was brought on behalf of Edwin Garrison, an Oklahoma resident who had an FTX yield-bearing account, and others like him.
Garrison alleges that while FTX lured U.S. investors to these accounts, it was a "Ponzi scheme" where investor funds were shuffled to related entities to maintain the appearance of liquidity.
The exchange filed for bankruptcy last Friday and is facing scrutiny from U.S. authorities amid reports that $10 billion in customer assets were shifted from FTX to Bankman-Fried's trading company Alameda Research.
At least $1 billion in client funds are missing, sources have told Reuters.
Representatives for Bankman-Fried, Brady, Osaka, the Golden State Warriors and David did not immediately respond to requests for comment on Wednesday.
FTX's new chief executive John J. Ray III declined to comment on the allegations.
He is not named as a defendant in the lawsuit.