A handful of well-known YouTubers with personal finance backgrounds have been targeted by victims who lost over $1 billion in wealth to Sam Bankman-Freed's FTX.
The financial influencer is facing a class action lawsuit alleging he was paid "well" to promote the FTX brand before it collapsed after similar cases were brought against celebrities including Tom Brady, Madonna and Gwenith Paltrow.
FTX collapsed over a 10-day period in November 2022 and its CEO, commonly known as SBF, is now under house arrest awaiting trial in October, accused of plotting a multi-billion dollar scam. Spending and risky bets via the exchange's subsidiary trading house, Alameda Research.
He pleaded not guilty in January.
It's unclear how many customers have been lost to the FTX scandal, although some have put the figure at around $8 billion, and there's no timeline for when depositors will be able to recover their money.
In the meantime, they follow those they believe are misleading them.
The class action was filed March 15 in the Miami Division of US District Court and is being reviewed by Fortune .
It lists seven applicants from the US, Canada, UK and Australia who have bought accounts with FTX performance.
They sued eight YouTubers, influencer agencies, and their founders for damages, alleging that "the defendants failed to disclose the nature and extent of their sponsorship and/or agreed arrangements, payments, and indemnities, and took no steps to make due (if any)." persistence "affirmation" .
The document claims that influencers played a “significant role” in the FTX scandal, stating that the crypto platform would not have reached such heights without their support and “hype.”
He added that influencers have received "undisclosed payments ranging from tens of thousands of dollars to multi-million dollar bribes."
Among the defendants named in the lawsuit, some flatly refused to accept money because of their positive attitude towards the company at the time.
Others try to distance themselves from the company and its problems by saying they never give personal financial advice. Among the accused is Kevin Paffrath, known to his 1.87 million YouTube subscribers through his channel Meet Kevin.
In a video published on his platform on Friday, Paffrat addressed the allegations directly in a video titled "He will be sued". In the video, he said he found it "terrifying" that anyone would lose money on FTX, adding that SBF was the "most obvious culprit."
He then asked, "What role, if any, does the promoter play?"
A self-proclaimed financial analyst asks a hypothetical question: If he were a real estate agent and received calls from potential home buyers, he could put them in touch with another agent who would eventually sell them the house. So this house could go under, which would drastically reduce its value, but would you take responsibility as the first point of contact?
"He looks like a ghost, who's to blame?" asked Father. “The further we get away from who is really in charge, the less responsibility becomes visible.
“The lawsuit essentially alleges that the person offering FTX is responsible for any and all fraud at FTX.
"It's like saying that the [real estate] agent who referred you to another agent is responsible for your house from chain to gutter."
He continued: "At the end of the day, people have to wear big pants.
"Why would a promoter guarantee the results of what they promote?"
'We're sorry'
Paffrat is named alongside a number of other financial innovators: Graham Stephan, a former real estate agent who worked for the Oppenheim Selling Sunset Group, Andrey Jih, Jasprit Singh of Minority Mindset, Brian Jung, Jeremy Lefevre, Tom Nash and Ben Armstrong. all mentioned allegedly received payments to promote the brand.
The Content Creation Agency and its founder Erika Kuhlberg are also mentioned.
Fortune has asked all defendants to comment. Paffrat added that he had nothing to say beyond the video and his Twitter updates.
None of the other respondents responded to the contact, but Armstrong previously told Decrypt newspaper that he: "Never spoke to anyone at FTX or as a marketing agency acting on their behalf. never. So the allegations against me are 100% false and it will be very easy to prove that."
Many content creators have addressed the FTX controversy on their YouTube channels, some apologizing, others trying to inform their viewers.
In a video titled "Let's Talk About FTX" posted four months ago, Stefani told his 4.2million followers: "Although I trusted the information you gave me, I was wrong and I excuse me I have waited
“I did my best to research and test everything I could think of that I wasn't expecting. Personally, I also use them as a trade due to the confidence they have in the industry.”
Why aren't they responsible?
Adam Moskowitz is the attorney representing the plaintiffs in this case, but he is aware of FTX's general situation.
Moskowitz of the Musikitz law firm is the attorney who filed similar lawsuits against NFL legend Brady, Brady's ex-wife, supermodel Gisele Bundchen and nine other celebrities.
In an interview with the Washington Post, Moskowitz said, "We have some very rich people that we all love, and they tell us they checked and it's fine. Why aren't they held accountable?
"It seems like a lot of investors are hurting and nobody really cares about them."
Referring to the recent case, Moskowitz told BuzzFeed , "Influencers are paid like any other promoter and are therefore held accountable. They get paid heavily to play a big part in today's social media financial decisions."
The Moskowitz law firm did not immediately respond to Fortune's request for comment.
This story was originally published on Fortune.com.
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