A new class-action lawsuit alleges that several popular financial YouTubers, including Graham Stephan, Andrei Jikh, Jaspreet Singh and others, should be blamed for promoting the now-disgraced cryptocurrency exchange FTX.
The plaintiff in the lawsuit is Edwin Garrison, who is also former FTX executive Sam Bankman-Frieda, along with Tom Brady, Stephen Curry, Shaquille O'Neil, Larry David, Kevin O'Leary and others. Bankman-Fried also faces multiple criminal fraud charges from various US government agencies, including the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
According to Federal Trade Commission (FTC) guidelines for social media influencers, creators must clearly state when they are being paid to promote a product. For example, Kim Kardashian settled $1.26 million with the FTC last year for failing to properly disclose that she was paid $250,000 to promote EthereumMax's EMAX token.
“FTX generously paid defendants to promote its brand and encourage investment by its subscribers, plaintiffs failed to disclose the nature and extent of sponsorship and/or endorsement agreements, payments and indemnities, and failed to exercise due diligence (if any) apply.” – says the process.
Kevin Paffrath, one of the influencers involved in the lawsuit, told TechCrunch the claim was false.
"If we regularly say, 'Hey, we're sponsored by…' or 'C'mon…' in our videos, you know it's advertising," he told TechCrunch. We also need to put a little box on our videos that says, "Hey, this video has a paid promotion," and each of our FTXs has a little note saying it's paid.
The lawsuit also alleges that the YouTuber engaged in a civil conspiracy with FTX and misled customers "under the false impression that cryptocurrency assets held on the FTX platform were safe and not invested in uncharted titles." .
While SEC Chairman Gary Gensler has argued that existing securities laws apply to cryptocurrencies, many in the crypto industry have argued the opposite. This lack of clarity makes it difficult to know when sipto companies and influencers will meet higher advertising value standards.
"Ms. Kardashian's case is a reminder to celebrities and others that the law was made public as to when and how much they paid to encourage securities investing," Gensler said of Kardashian's settlement with the SEC.
If FTX is considered collateral, these YouTubers could be held responsible for not disclosing exactly how much FTX they paid.
Financial YouTuber Amanda Silberling has sued over TechCrunch's FTX promotion