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Because the FTX cryptocurrency trade imploded final fall, Tom Brady, the seven-time Tremendous Bowl-winning quarterback, made an pressing cellphone name.
He dialed Sina Nader, FTX’s head of partnerships. The trade’s employees was in the midst of a disaster assembly with its beleaguered founder, Sam Bankman-Fried. Mr. Nader couldn’t reply. “I by no means would’ve anticipated to say no a name from Tom Brady,” he mentioned.
Mr. Brady had causes to be involved. As an “ambassador” for FTX, he had appeared on the firm’s convention within the Bahamas and in TV commercials that promoted the trade as “probably the most trusted” establishment within the loosely regulated world of crypto.
His cash was additionally at stake. As a part of an endorsement settlement Mr. Brady signed in 2021, FTX had paid him $30 million, a deal that consisted nearly solely of FTX inventory, three individuals with information of the contract mentioned. Mr. Brady’s spouse on the time, the supermodel Gisele Bündchen, was paid $18 million in FTX inventory, one of many individuals mentioned.
Now FTX is bankrupt, and Mr. Bankman-Fried is dealing with legal fraud costs. Mr. Brady, 45, and Ms. Bündchen, 42, have been sued by a gaggle of FTX clients looking for compensation from the celebrities who endorsed the trade. On prime of all of it, the phrases of the deal would have required the previous couple, who divorced final yr, to pay taxes on a minimum of a few of their now nugatory FTX inventory, two individuals acquainted with the endorsement deal mentioned.
Their scenario is the highest-profile instance of a humiliating reckoning dealing with the actors, athletes and different celebrities who rushed to embrace the straightforward cash and on-line hype of cryptocurrencies. Through the increase occasions, Paris Hilton, Snoop Dogg, Reese Witherspoon and Matt Damon all gushed about or invested in crypto initiatives, bringing a mainstream viewers to the wonky world of digital currencies. It was enjoyable — and profitable — whereas costs soared.
However final yr’s crash ended the celeb 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 endorsed the EthereumMax crypto token. In December, a lawyer in California sued two crypto firms, MoonPay and Yuga Labs, accusing them of utilizing a “huge community of A-list musicians, athletes and celeb shoppers” to mislead buyers about digital property.
In March, the S.E.C. charged the actress Lindsay Lohan, the web influencer Jake Paul and musicians together with Soulja Boy and Lil Yachty with illegally selling crypto property. And in late Might, after months of failed makes an attempt, a course of server delivered court docket papers to Shaquille O’Neal, the retired basketball star, who was sued for selling FTX, based on authorized filings. Mr. O’Neal was served whereas broadcasting from a Nationwide Basketball Affiliation playoff sport.
Representatives for Mr. Brady, Mr. Bankman-Fried and MoonPay declined to remark. A spokeswoman for Yuga Labs mentioned 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 provide stars a method to generate income whereas staying on the slicing fringe of web tradition; the celebrities assist younger firms acquire credibility and attain a bigger viewers.
Of all of the start-ups that recruited celebrities to endorse crypto, FTX was maybe probably the most keen. As Mr. Bankman-Fried tried to show FTX right into a family title, he made a listing of celebrities he may envision selling the corporate, recalled Mr. Nader, the previous FTX government. Mr. Brady’s title was on the prime.
A former faculty soccer participant, Mr. Nader was answerable for recruiting Mr. Brady and different stars. In June 2021, Mr. Brady and Ms. Bündchen agreed to a cope with Mr. Bankman-Fried, praising the “revolutionary FTX staff.” Mr. Brady appeared genuinely curious about crypto, Mr. Nader mentioned, and sometimes had conversations with Mr. Bankman-Fried.
“Think about a tiger and a lion speaking,” Mr. Nader mentioned. “They’re barely totally 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 referred to as nonfungible 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 Ms. Bündchen starred in a $20 million promoting marketing campaign for FTX, with commercials that ran throughout N.F.L. video games. Mr. Brady additionally posted TikTok movies with Mr. Bankman-Fried from FTX’s headquarters within the Bahamas, the place he spoke at a convention in entrance of a whole bunch. Backstage, Mr. Bankman-Fried remarked that he may think about shopping for a soccer staff sometime with Mr. Brady. Ms. Bündchen additionally appeared on the convention as FTX’s head of environmental and social initiatives.
When FTX collapsed final November, the corporate’s $32 billion valuation — together with Mr. Brady and Ms. Bündchen’s $48 million of shares — plummeted to zero. The couple had additionally obtained a small quantity of Ethereum, Bitcoin and Solana tokens to commerce on the platform, one of many individuals mentioned, which disappeared in FTX’s chapter.
Mr. Brady has not commented publicly on FTX or his relationship with Mr. Bankman-Fried. After FTX’s disaster assembly in November, Mr. Nader known as him again.
“He was involved,” Mr. Nader mentioned. “The very very first thing he requested me was: ‘Sina, how are you doing? I do know you set your coronary heart and soul into this.’”
Ms. Bündchen mentioned in a March interview with Vainness Truthful that she had “trusted the hype” and felt “blindsided.”
Mr. Brady’s different crypto enterprise has additionally struggled. Autograph’s income sank final yr amid the crypto meltdown, an individual acquainted with its funds mentioned. The beginning-up has shifted its technique to focus extra on serving to celebrities discover methods to foster loyalty with their followers, and fewer on advertising crypto tokens to customers, the particular person mentioned. The agency has additionally eliminated some crypto language from its advertising, downplaying phrases like NFT, one other particular person with information of the corporate mentioned.
Autograph has additionally reduce greater than 50 workers in layoff rounds, a 3rd particular person mentioned. The reductions had been reported earlier by Insider. An Autograph spokeswoman declined to remark.
Mr. Brady has additionally confronted authorized hassle. In December, the lawyer Adam Moskowitz and the legislation agency Boies Schiller Flexner filed a lawsuit in federal court docket in Florida accusing him and Ms. Bündchen of deceptive buyers. Among the many different defendants are the comic Larry David, the N.B.A. star Steph Curry and the tennis participant Naomi Osaka, all of whom endorsed FTX.
“None of those defendants carried out any due diligence previous to advertising these FTX merchandise to the general public,” the lawsuit mentioned.
Some celebrities narrowly escaped the crypto mess. Katy Perry, the pop star, held talks a couple of partnership with FTX that by no means got here to fruition, three individuals acquainted with the scenario have mentioned.
In spring final yr, Taylor Swift mentioned a cope with FTX that would have paid as a lot as $100 million, two individuals acquainted with the matter mentioned. A tour sponsorship was on the desk after Ms. Swift declined different promotional choices, an individual with information of the talks mentioned. The deal’s measurement was reported earlier by The Monetary Instances.
Mr. Moskowitz mentioned on a podcast in April that Ms. Swift had performed due diligence on FTX, asking the trade to show that its cryptocurrencies weren’t unregistered securities. His feedback led to a flurry of headlines about Ms. Swift’s enterprise acumen. However in an interview with The New York Instances, Mr. Moskowitz mentioned he had no inside details about the talks.
In actuality, Ms. Swift’s aspect signed the sponsorship settlement with FTX after greater than six months of discussions, three individuals with information of the deal mentioned, and it was Mr. Bankman-Fried who pulled out. The last-minute reversal left Ms. Swift’s staff annoyed and disenchanted, two of the individuals mentioned.
A spokeswoman for Ms. Swift declined to remark.
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