As the FTX cryptocurrency alternate imploded final fall, Tom Brady, the seven-time Super Bowl-winning quarterback, made an pressing cellphone name.
He dialed Sina Nader, FTX’s head of partnerships. The alternate’s workers was in the midst of a disaster assembly with its beleaguered founder, Sam Bankman-Fried. Mr. Nader couldn’t reply. “I never would’ve expected to decline a call 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 in TV commercials that promoted the alternate as “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 virtually completely of FTX inventory, three folks with information of the contract stated. Mr. Brady’s spouse on the time, the supermodel Gisele Bündchen, was paid $18 million in FTX inventory, one of many folks stated.
Now FTX is bankrupt, and Mr. Bankman-Fried is going through prison fraud costs. Mr. Brady, 45, and Ms. Bündchen, 42, have been sued by a bunch of FTX prospects searching for compensation from the celebrities who endorsed the alternate. On high of all of it, the phrases of the deal would have required the previous couple, who divorced final 12 months, to pay taxes on a minimum of a few of their now nugatory FTX inventory, two folks acquainted with the endorsement deal stated.
Their scenario is the highest-profile instance of a humiliating reckoning going through the actors, athletes and different celebrities who rushed to embrace the simple cash and on-line hype of cryptocurrencies. During the growth occasions, Paris Hilton, Snoop Dogg, Reese Witherspoon and Matt Damon all gushed about or invested in crypto tasks, bringing a mainstream viewers to the wonky world of digital currencies. It was enjoyable — and profitable — whereas costs soared.
But final 12 months’s crash ended the superstar crypto bonanza.
In October, the Securities and Exchange Commission ordered Kim Kardashian to pay $1.26 million for failing to make sufficient disclosures when she endorsed the EthereumMax crypto token. In December, a lawyer in California sued two crypto corporations, MoonPay and Yuga Labs, accusing them of utilizing a “vast network of A-list musicians, athletes and celebrity clients” 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 May, after months of failed makes an attempt, a course of server delivered courtroom papers to Shaquille O’Neal, the retired basketball star, who was sued for selling FTX, in response to authorized filings. Mr. O’Neal was served whereas broadcasting from a National Basketball Association playoff sport.
Representatives for Mr. Brady, Mr. Bankman-Fried and MoonPay declined to remark. A spokeswoman for Yuga Labs stated the corporate had “never paid a celebrity to join the club.” 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 start-ups provide stars a approach to become profitable whereas staying on the reducing fringe of web tradition; the celebrities assist younger corporations achieve 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 identify, he made a listing of celebrities he might envision selling the corporate, recalled Mr. Nader, the previous FTX govt. Mr. Brady’s identify was on the high.
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 take care of Mr. Bankman-Fried, praising the “revolutionary FTX team.” Mr. Brady appeared genuinely curious about crypto, Mr. Nader stated, and infrequently had conversations with Mr. Bankman-Fried.
“Imagine a tiger and a lion talking,” Mr. Nader stated. “They’re slightly different, they do different things, but they’re really formidable in their own arenas.”
In 2021, Mr. Brady additionally co-founded Autograph, which helps well-known folks promote the crypto collectibles often called nonfungible tokens, or NFTs. Autograph raised greater than $200 million from buyers, and Mr. Bankman-Fried joined the board.
That similar 12 months, 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 lot. Backstage, Mr. Bankman-Fried remarked that he might think about shopping for a soccer workforce 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 folks stated, 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 referred to as him again.
“He was concerned,” Mr. Nader stated. “The very first thing he asked me was: ‘Sina, how are you doing? I know you put your heart and soul into this.’”
Ms. Bündchen stated in a March interview with Vanity Fair that she had “trusted the hype” and felt “blindsided.”
Mr. Brady’s different crypto enterprise has additionally struggled. Autograph’s income sank final 12 months amid the crypto meltdown, an individual acquainted with its funds stated. The start-up has shifted its technique to focus extra on serving to celebrities discover methods to foster loyalty with their followers, and fewer on advertising and marketing crypto tokens to shoppers, the individual stated. The agency has additionally eliminated some crypto language from its advertising and marketing, downplaying phrases like NFT, one other individual with information of the corporate stated.
Autograph has additionally minimize greater than 50 workers in layoff rounds, a 3rd individual stated. The reductions have been reported earlier by Insider. An Autograph spokeswoman declined to remark.
Mr. Brady has additionally confronted authorized bother. In December, Adam Moskowitz and the regulation agency Boies Schiller Flexner filed a lawsuit in federal courtroom in Florida accusing him and Ms. Bündchen of deceptive buyers. Among the opposite 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 these defendants performed any due diligence prior to marketing these FTX products to the public,” the lawsuit stated.
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 folks acquainted with the scenario have stated.
In spring final 12 months, Taylor Swift mentioned a take care of FTX that would have paid as a lot as $100 million, two folks acquainted with the matter stated. A tour sponsorship was on the desk after Ms. Swift declined different promotional choices, an individual with information of the talks stated. The deal’s dimension was reported earlier by The Financial Times.
Mr. Moskowitz, the lawyer suing the celebrities, stated on a podcast in April that Ms. Swift had performed due diligence on FTX, asking the alternate to show that its cryptocurrencies weren’t unregistered securities. His feedback led to a flurry of headlines about Ms. Swift’s business acumen. But in an interview with The New York Times, Mr. Moskowitz stated 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 folks with information of the deal stated, and it was Mr. Bankman-Fried who pulled out. The last-minute reversal left Ms. Swift’s workforce annoyed and upset, two of the folks stated.
A spokeswoman for Ms. Swift declined to remark.
Source: www.nytimes.com