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FTX social media lawsuit overview:
- Who: A group of seven plaintiffs have filed a class action lawsuit against YouTube star Brian Jung.
- Why: Brian Jung allegedly promoted the sale of FTX yield-bearing accounts without disclosing that he was paid by FTX in violation of federal and state laws.
- Where: The FTX disaster lawsuit was filed in Maryland federal court.
YouTube star Brian Jung is facing a $1 billion class action lawsuit for allegedly promoting the sale of FTX yield bearing accounts without disclosing in any of his YouTube or social media posts that he was paid by FTX.
“The FTX disaster is the largest financial fraud in U.S. history,” seven plaintiffs allege in the FTX class action lawsuit.
They explain FTX yield-bearing accounts were marketed as savings accounts that customers who signed up for the FTX app would receive by default. They were allegedly guaranteed to generate returns on the holdings in the accounts, whether they were held as legal tender or cryptocurrency.
FTX social media misrepresentations allegedly enticed plaintiffs to invest
The plaintiffs each claim they purchased FTX yield-bearing accounts after being exposed to Jung’s misrepresentations about the FTX platform and subsequently sustained damages for which Jung is liable.
“Literally overnight, plaintiffs lost their assets held in their YBAs on FTX’s trading platform as FTX imploded and filed a Chapter 11 bankruptcy petition in Delaware on an emergency basis,” the FTX disaster lawsuit says.
FTX’s founders were subsequently charged with fraud, money laundering and other criminal charges. The plaintiffs claim FTX’s fraudulent scheme was designed to take advantage of investors worldwide and ultimately resulted in FTX investors sustaining billions of dollars in damages.
“With the rise to prominence of the internet and social media, a new multi-billion-dollar cottage industry of ‘Influencers’ has been created,” the FTX social media lawsuit says.
The plaintiffs say evidence shows influencers played an important role in the FTX disaster and that “FTX could not have risen to such great heights without the massive impact of these influencers,” who allegedly hyped the FTX platform in exchange for undisclosed bribes.
The undisclosed payments allegedly ranged from tens of thousands to millions of dollars, according to the FTX disaster class action lawsuit.
The U.S. Securities and Exchange Commission reportedly determined in 2017 that if yield bearing accounts are found to be “securities,” promoters could be held liable under state and federal regulations for promoting an unregistered security or failing to disclose their compensation.
The plaintiffs filed the class action lawsuit on behalf of a global and nationwide class of persons and entities who purchased or enrolled in an FTX yield bearing account within the applicable limitations period.
The FTX disaster class action lawsuit asserts claims for violations of the Florida Securities and Investor Protection Act, the Florida Deceptive and Unfair Trade Practices Act, as well as civil conspiracy, and they seeks a declaratory judgment.
Another FTX class action lawsuit was filed earlier this year against 10 influencers who promoted the cryptocurrency platform on their YouTube channels.
What do you think about the FTX disaster? Tell us about it in the comments!
Garrison is represented by Michael S. Mitchell and Brooke Alexander of Boies Schiller Flexner LLP.
The FTX disaster class action lawsuit is Edwin Garrison, et al. v. Brian Jung, Case No. 8:23-cv-01969-PX, in the U.S. District Court for the District of Maryland, Southern Division.
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