An FTX customer filed a lawsuit against the Golden State Warriors on Monday, alleging that the defending NBA champions had falsely promoted the now-defunct cryptocurrency exchange.
On behalf of "thousands, if not millions" of individuals who traded outside of the United States using FTX's platform, Elliott Lam, a Canadian citizen and resident of Hong Kong, filed his proposed class-action lawsuit in San Francisco federal court.
Sam Bankman-Fried, the creator of FTX, and Caroline Ellison, the head of Bankman-trading Fried's company Alameda Research, are two further defendants.
Lam charged the defendants with making false claims about FTX being a "viable and safe way to invest in crypto" in an effort to trick investors into making investments there. Customers with FTX yield-bearing accounts who reside outside of the United States are being sued for damages under California consumer laws. According to Lam, he lost $750,000 from his account.
In what was billed as a groundbreaking cryptocurrency relationship in professional sports, The Warriors declared FTX its official cryptocurrency platform in December. According to a Warriors spokesman, the franchise won't comment on active legal cases. Requests for further comment from Lam's attorneys were not immediately fulfilled.
The Warriors are also named as a defendant in a complaint filed on November 16 in Miami by FTX users from the US who want compensation from celebrities who have endorsed their products, such as Warriors guard Stephen Curry, quarterback Tom Brady, comedian Larry David, and tennis player Naomi Osaka. The Warriors halted FTX-related promotions last week, according to reports in the media.
The Miami Heat, a different NBA franchise, said on November 11 that it will remove the FTX name from its arena and look for a new naming sponsor. On the same day, FTX also requested Chapter 11 protection. The Miami complaint does not name The Heat as a defendant.
The collapse of FTX has shocked the cryptocurrency community and prompted many investors to panic and liquidate their holdings. With a historic decline from its peak of $69,000 just a year ago, Bitcoin has now dropped to roughly $16,000, its lowest point in the past two years. In a petition this week in federal bankruptcy court, John Ray, the new CEO who took over the business from Bankman-Fried after it filed for bankruptcy, expressed his dismay with the company.
"Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here," Ray said.