YouTube Influencers Slapped With $1 Billion Lawsuit for Promoting FTX

A group of YouTube influencers has been hit with a massive $1 billion lawsuit for allegedly promoting FTX, a cryptocurrency exchange platform. The lawsuit claims that the influencers failed to disclose their financial relationships with FTX while promoting the platform to their large social media following. The lawsuit also alleges that the influencers made false and misleading statements about FTX, which could have misled investors. The lawsuit highlights the growing importance of transparency in influencer marketing, particularly within the cryptocurrency industry, where investors are increasingly informed by social media channels.

A group of investors who did business with defunct cryptocurrency exchange FTX are suing multiple internet influencers, alleging that they pushed unregistered securities on their followers while promoting the collapsed exchange. The lawsuit seeks over $1 billion in damages and was brought against content creators that reached millions online, including BitBoy Crypto creator Ben Armstrong and finance YouTube creator Graham Stephan, among seven other individuals and the talent management firm Creators Agency.

According to the lawsuit, the unregistered securities “endorsed and promoted” were yield-bearing accounts offered by FTX, and the creators were paid to endorse FTX, which was a “fraudulent scheme […] designed to take advantage of investors from across the globe.” The defendants named in the case played a crucial role in elevating the collapsed business, the lawsuit claims.

The plaintiffs, who include residents of the United Kingdom, Canada, and Australia, allege that the defendants are responsible for damages due to “misrepresentations and omissions regarding the FTX platform.” The lawsuit claims that YouTube played a central role in how influencers promoted FTX, noting that the video streaming platform is more popular than network television.

Since the collapse of FTX, several of the lawsuit’s defendants have “scrubbed their YouTube channels of all video clips endorsing FTX and praising Sam Bankman-Fried” and replaced them with apology videos, the lawsuit claims.

FTX, once one of the largest cryptocurrency exchanges, collapsed last November after a run on the exchange was triggered by a steep drop in its native token FTT. The run revealed FTX did not hold one-to-one reserves of customer assets as it failed to honor customer withdrawals, forcing it to file for Chapter 11 bankruptcy.

Bankman-Fried, FTX’s founder and former CEO, was later arrested and charged with a litany of financial crimes. FTX insiders including Caroline Ellison and Gary Wang have pleaded guilty to crimes in connection with FTX’s collapse and are cooperating with authorities.

In conclusion, the lawsuit against multiple internet influencers and talent management firm Creators Agency is seeking over $1 billion in damages due to misrepresentations and omissions regarding the FTX platform. The influencers allegedly played a significant role in promoting FTX by pushing unregistered securities on their followers. Since FTX’s collapse, several defendants have scrubbed their channels of all video clips endorsing FTX and replaced them with apology videos. YouTube played a central role in how influencers promoted FTX, as it is a popular video streaming platform.

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