Eight YouTubers who talked up FTX before its collapse are being sued.
A $1 billion class action lawsuit filed March 15 in the Southern District of Florida alleges that Graham Stephan, Kevin Paffrath, Andrei Jikh, Jaspreet Singh, Brian Jung, Jeremy Lefebvre, Tom Nash, Ben Armstrong, and Erika Kullberg, as well as talent management firm Creators Agency, “promoted, assisted in, and/or participated in” the sale of “unregistered securities” by FTX.
“FTX turned to celebrity and social media endorsers to position itself as the ‘safe’ option among cryptocurrency exchanges,” the suit alleges. “FTX’s paid endorser program was clearly designed to use the positive reputation associated with specific YouTube and other social network influencers to convince consumers that FTX was a safe place to buy and sell cryptocurrency.”
Subscribe for daily Tubefilter Top Stories
The suit further alleges that creators did not adhere closely enough to Federal Trade Commission (FTC) guidelines about disclosing their financial ties to FTX.
“Though FTX paid Defendants handsomely to push its brand and encourage their followers to invest, Defendants did not disclose the nature and scope of their sponsorships and/or endorsement deals, payments and compensation, nor conduct adequate (if any) due diligence,” the suit says.
The suit’s plaintiff, Edwin Garrison, is a private investor who’s also filed a lawsuit against FTX’s former CEO Sam Bankman-Fried. That lawsuit additionally targets traditional celebrities and athletes who promoted FTX, including Kevin O’Leary, Tom Brady, Stephen Curry, Shaquille O’Neal, and Larry David.
BuzzFeed reports that Garrison’s class action suit against Stephan and other YouTubers has been joined by a number of FTX investors from around the world.
“Influencers are paid, just like all other promoters, and thus must be held accountable,” Adam Moskowitz, the attorney representing Garrison and other plaintiffs, told BuzzFeed. “They are paid so much because they play an important role today with social media, in making financial decisions.”
Kevin Paffrath, who has nearly 2 million followers for his real estate/finance YouTube channel Meet Kevin, posted a video March 16 (embedded above) where he addresses the lawsuit. In it, he denies wrongdoing.
“I lost of money as well on BlockFi, more than I ever made from FTX, frankly, but do I blame the guy who suggested I invest in BlockFi? No. I just put on my big boy pants and accepted the reality of what had happened,” he said. “I’ve always been a believer that crypto is speculative and short of regulation, and if someone chooses to engage in crypto, that is on them.”
Paffrath also specifically addressed the lawsuit’s allegations that he and/or other creators did not adequately disclose their financial relationships with FTX.
“It’s pretty obvious that when we say regularly, ‘Hey, we’re sponsored by…’ on our videos, or ‘Brought to you by…’, you know, this is an ad,” he told TechCrunch. “We even have to check a little box on our videos that say, ‘Hey, this video includes a paid promotion,’ and every one of our FTX ones has a little disclaimer that says this is paid.”
None of the other creators named in the suit have issued public comments.