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The celebrity quarterback is among the many celebrities coping with the fallout from the crypto crash. Others, like Taylor Swift, escaped.
SAN FRANCISCO — Because the FTX cryptocurrency change imploded final fall, Tom Brady, the seven-time Tremendous Bowl-winning quarterback, made an pressing telephone name.
He dialed Sina Nader, FTX’s head of partnerships. The change’s employees was in the course of a disaster assembly with its beleaguered founder, Sam Bankman-Fried. Nader couldn’t reply. “I by no means would’ve anticipated to say no a name from Tom Brady,” he stated.
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 change as “probably the most trusted” establishment within the loosely regulated world of crypto.
His cash was additionally at stake. As a part of an endorsement settlement Brady signed in 2021, FTX had paid him $30 million, a deal that consisted virtually totally of FTX inventory, three folks with information of the contract stated. Brady’s spouse on the time, supermodel Gisele Bündchen, was paid $18 million in FTX inventory, one of many folks stated.
Now FTX is bankrupt, and Bankman-Fried is going through prison fraud expenses. Brady, 45, and Bündchen, 42, have been sued by a bunch of FTX prospects searching for compensation from the celebrities who endorsed the change. On high of all of it, the phrases of the deal would have required the previous couple, who divorced final yr, to pay taxes on a minimum of a few of their now nugatory FTX inventory, two folks accustomed to the endorsement deal stated.
Their state of affairs 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. Throughout the growth occasions, Paris Hilton, Snoop Dogg, Reese Witherspoon and Matt Damon all gushed about or invested in crypto initiatives, bringing a mainstream viewers to the wonky world of digital currencies. It was enjoyable — and profitable — whereas costs soared.
However final yr’s crash ended the movie star crypto bonanza.
In October, the Securities and Alternate Fee ordered Kim Kardashian to pay $1.26 million for failing to make enough 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 “huge community of A-list musicians, athletes and movie star purchasers” to mislead buyers about digital property.
In March, the SEC charged actress Lindsay Lohan, on-line influencer Jake Paul, and musicians together with Soulja Boy and Lil Yachty with illegally selling crypto property. And in late Could, after months of failed makes an attempt, a course of server delivered court docket papers to Shaquille O’Neal, the retired basketball star, who was sued for selling FTX, based on authorized filings. O’Neal was served whereas broadcasting from a Nationwide Basketball Affiliation playoff sport.
Representatives for Brady, Bankman-Fried and MoonPay declined to remark. A spokesperson for Yuga Labs stated the corporate had “by no means paid a star to affix the membership.” Representatives for Bündchen and O’Neal didn’t reply to requests for remark.
Tech startups and celebrities have lengthy had a symbiotic relationship. The startups provide stars a approach to become profitable whereas staying on the reducing fringe of web tradition; the celebrities assist younger corporations acquire credibility and attain a bigger viewers.
Of all of the startups that recruited celebrities to endorse crypto, FTX was maybe probably the most keen. As Bankman-Fried tried to show FTX right into a family identify, he made a listing of celebrities he might envision selling the corporate, recalled Nader, the previous FTX govt. Brady’s identify was on the high.
A former school soccer participant, Nader was in control of recruiting Brady and different stars. In June 2021, Brady and Bündchen agreed to a cope with Bankman-Fried, praising the “revolutionary FTX group.” Brady appeared genuinely inquisitive about crypto, Nader stated, and sometimes had conversations with Bankman-Fried.
“Think about a tiger and a lion speaking,” Nader stated. “They’re barely completely different, they do various things, however they’re actually formidable in their very own arenas.”
In 2021, Brady additionally co-founded Autograph, which helps well-known folks promote the crypto collectibles generally known as non-fungible tokens, or NFTs. Autograph raised greater than $200 million from buyers, and Bankman-Fried joined the board.
That very same yr, Brady and Bündchen starred in a $20 million promoting marketing campaign for FTX, with commercials that ran throughout NFL video games. Brady additionally posted TikTok movies with Bankman-Fried from FTX’s headquarters within the Bahamas, the place he spoke at a convention in entrance of lots of. Backstage, Bankman-Fried remarked that he might think about shopping for a soccer group sometime with Brady. Bündchen additionally appeared on the convention as FTX’s head of environmental and social initiatives.
When FTX collapsed in November, the corporate’s $32 billion valuation — together with Brady and Bündchen’s $48 million in shares — plummeted to zero. The couple had additionally acquired 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.
Brady has not commented publicly on FTX or his relationship with Bankman-Fried. After FTX’s disaster assembly in November, Nader known as him again.
“He was involved,” Nader stated. “The very very first thing he requested me was: ‘Sina, how are you doing? I do know you place your coronary heart and soul into this.’”
Bündchen stated in a March interview with Vainness Honest that she had “trusted the hype” and felt “blindsided.”
Brady’s different crypto enterprise has additionally struggled. Autograph’s income sank final yr amid the crypto meltdown, an individual accustomed to its funds stated. The startup 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 customers, 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 reduce greater than 50 staff in layoff rounds, a 3rd individual stated. The reductions have been reported earlier by Insider. An Autograph spokesperson declined to remark.
Brady has additionally confronted authorized bother. In December, Adam Moskowitz and the legislation agency Boies Schiller Flexner filed a lawsuit in federal court docket in Florida accusing him and Bündchen of deceptive buyers. Among the many different defendants are comic Larry David, NBA star Steph Curry and tennis participant Naomi Osaka, all of whom endorsed FTX.
“None of those defendants carried out any due diligence previous to advertising and marketing these FTX merchandise to the general public,” the lawsuit stated.
Some celebrities narrowly escaped the crypto mess. Katy Perry, the pop star, held talks a few partnership with FTX that by no means got here to fruition, three folks accustomed to the state of affairs have stated.
In spring final yr, Taylor Swift mentioned a cope with FTX that might have paid as a lot as $100 million, two folks accustomed to the matter stated. A tour sponsorship was on the desk after Swift declined different promotional choices, an individual with information of the talks stated. The deal’s measurement was reported earlier by The Monetary Occasions.
Moskowitz, the lawyer suing the celebrities, stated on a podcast in April that Swift had carried out due diligence on FTX, asking the change to show that its cryptocurrencies weren’t unregistered securities. His feedback led to a flurry of headlines about Swift’s enterprise acumen. However in an interview with The New York Occasions, Moskowitz stated he had no inside details about the talks.
In actuality, 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 Bankman-Fried who pulled out. The last-minute reversal left Swift’s group pissed off and disillusioned, two of the folks stated.
A spokesperson for Swift declined to remark.
This text initially appeared in The New York Occasions.