Bankman-Fried agrees to help sue celebrity crypto promoters

A group FTX investors have agreed to drop legal claims against Sam Bankman-Fried.

In return, the crypto exchange’s disgraced former CEO will join investor lawsuits against other defendants arising from FTX’s collapse, including several celebrities paid to promote the exchange, according to court documents filed Friday (April 19).

The settlement, first reported by Bloomberg News, comes weeks after Bankman-Fried sentenced to 25 years in prison for the fraud that led to the multi-billion dollar collapse of FTX in November 2022.

Former investors and customers of FTX have sued a number of people who supported the company when it was flying high, claiming they aided the stock market’s fraud.

According to the settlement, the plaintiffs believe that Bankman-Fried has “knowledge and other information” that the plaintiffs find valuable in that case. As part of the agreement, Bankman-Fried would also hand over non-privileged documents listing his assets and his investment in artificial intelligence (AI) startup Anthropic, as well as an affidavit certifying his assets as negative.

He will also turn over any information he has about venture capital firms that have invested in FTX, as well as lawyers and accountants who have worked for the company.

Even before criminal charges were filed against Bankman-Fried, a group of investors filed a lawsuit Famous Endorsers of FTX – a group that also includes Tom Brady, Gisele Bündchen and Shaquille O’Neal – for securities law violations, claiming they failed to conduct proper due diligence.

The lawsuit was filed in federal court in Miami in November 2022, days after FTX declared bankruptcy and weeks before Bankman-Fried was accused of using customer funds to finance investments, real estate purchases and political donations.

Last week’s settlement came days after Bankman-Fried appealed his conviction and sentence, part of what could be a years-long trial.

An April 11 report from Reuters noted that Bankman-Fried’s former lawyer Mark Cohen argued at a conference that day that there was a difference between his ex-client’s 25-year sentence and that of Binance founder Changpeng Zhao for violating anti-money laundering laws. will probably be not longer than 18 months.

The 25-year sentence was less than the 40- to 50-year sentence prosecutors sought, but much higher than the sentence prosecutors sought. five to six years pressured by Bankman-Fried’s lawyers.

“Ultimately, the criminal justice system only thrives when it is seen as fair,” Judge Lewis Kaplan said in announcing the sentencing. “People need to feel like it’s fair, otherwise we’ll be tried again through a fight. The punishment must match the seriousness of the crime. And this was a serious crime.”