When the FTX cryptocurrency exchange collapsed last fall, Tom Bradythe seven-time Super Bowl winning quarterback made an emergency phone call.
He called Sina Nader, head of partnerships at FTX. The exchange staff was in the midst of a crisis meeting with its beleaguered founder, Sam Bankman-Fried. Mister. Nader could not answer. “I never expected to turn down a call from Tom Brady,” he said.
Mister. Brady had reason to be concerned. As an “ambassador” for FTX, he has spoken at the company’s conference in the Bahamas and on television. commercials which facilitated the exchange “the most reliable” an institution in the freely regulated world of cryptography.
His money was also at stake. As part of support Agreement Mr. Brady signed the contract in 2021, FTX paid him $30 million, a deal that consisted almost entirely of FTX stock, three people familiar with the contract said. Mister. Brady’s then-wife, supermodel Gisele Bündchen, was paid $18 million in FTX stock, according to one source.
Now FTX went bankrupt, and Mr. Bankman-Fried is accused of fraud. Mister. Brady, 45, and Ms. Bündchen, 42, is suing a group of FTX clients seeking compensation from celebrities who backed the exchange. On top of that, the terms of the deal required the former couple, who divorced last year to pay taxes on at least some of its now worthless FTX shares, two people familiar with the endorsement agreement said.
Their situation is the loudest example of the humiliating retribution faced by actors, athletes and other celebrities who rushed to accept the easy money and online hype surrounding cryptocurrencies. During the boom Paris Hilton, Snoop Dogg, Reese Witherspoon and Matt Damon everyone was passionate about or invested in crypto projects, bringing a core audience to the shaky world of digital currencies. It was fun and lucrative while prices were rising.
But last year’s accident The crypto-gold life of celebrities is over.
In October, the Securities and Exchange Commission ordered Kim Kardashian will pay $1.26 million for not disclosing proper information when she endorsed the EthereumMax crypto token. In December, a California lawyer sued two cryptocurrency companies, MoonPay and Yuga Labs, accusing them of using “an extensive network of musicians, athletes and celebrities” to mislead investors about digital assets.
In March SEC charged actress Lindsay Lohan, Internet blogger Jake Paul and musicians, including Soulja Boy and Lil Yachty, illegally promoting cryptocurrency assets. And at the end of May, after several months of unsuccessful attempts, the process server delivered court papers Shaquille O’Neal, a retired basketball star who has been sued for promoting FTX, according to legal documents. Mister. O’Neal was filed during the broadcast of a National Basketball Association playoff game.
Representatives for Mr. Brady, Mr. Bankman-Fried and MoonPay declined to comment. A spokesperson for Yuga Labs stated that the company has “never paid celebrities to join the club.” Representatives for Mr. Bündchen and Mr. O’Neill did not respond to requests for comment.
Tech startups and celebrities have long had a symbiotic relationship. Startups offer stars the opportunity to make money while staying at the forefront of internet culture; Celebrities help young companies build trust and reach a wider audience.
Of all the startups that have attracted celebrities to support crypto, FTX has been arguably the most active. As Mr. Bankman-Freed tried to make FTX a household name, he compiled a list of celebrities he could introduce to promote the company, Mr. Black recalled. Nader, former head of FTX. Mister. Brady’s name was on top.
A former college football player, Mr. Nader was in charge of recruiting Mr. Brady and other stars. In June 2021 Brady and Ms. Bündchen agreed to a deal with Mr. Bankman-Fried praising the “revolutionary FTX team”. Mister. Brady seemed to have a genuine interest in cryptography. Nader said, and he talked to Mr. Bankman-Freed from time to time.
“Imagine a tiger and a lion talking,” Nader said. “They’re a little different, they do different things, but they’re really formidable in their own arenas.”
In 2021, Brady also co-founded Autograph, which helps high-profile individuals sell cryptographic collectibles known as non-fungible tokens, or NFTs. Autograph has raised over $200 million from investors, and Mr. Bankman-Fried joined the board of directors.
That same year, Mr. Brady and Ms. Bündchen tagged in a $20 million FTX advertising campaign with ads that ran during NFL games. Mister. Brady also wrote Video from TikTok with Mr. Bankman-Fried from FTX headquarters in the Bahamas, where he spoke at a conference in front of hundreds of people. Backstage, Mr. Bankman-Freed noticed that he could imagine buying a football team with Mr. Brady. RS. Bündchen also appeared at the conference as FTX’s leader of environmental and social initiatives.
When FTX collapsed last November, the company’s $32 billion valuation included Mr. Brady and Ms. Bündchen’s $48 million shares fell to zero. The pair also received a small amount of Ethereum, Bitcoin and Solana tokens to trade on the platform, which disappeared in the FTX bankruptcy, according to one of the sources.
Mister. Brady has not publicly commented on FTX or his relationship with Mr. Black. Bankman Fried. After the FTX crisis meeting in November, Mr. Nader called him back.
“He was worried,” Mr. Nader said. “The very first thing he asked me was, ‘Sina, how are you? I know you put your heart and soul into this.”
RS. Bündchen said in March interview with Vanity Fair that she “trusted the hype” and felt “dazzled”.
Mister. Brady’s other crypto venture also ran into trouble. Autograph’s revenue fell last year due to the cryptocurrency crash, said a person familiar with its finances. The startup has shifted its strategy to focus more on helping celebrities find ways to build their fan loyalty and less on marketing crypto tokens to consumers, the source said. The firm has also removed some cryptographic terms from its marketing, downplaying terms such as NFT, according to another person familiar with the company.
Autograph also cut more than 50 employees as part of layoffs, a third source said. Previously, the reduction was reported insider. An Autograph spokesperson declined to comment.
Mister. Brady also ran into trouble with the law. In December, Adam Moskowitz and law firm Boies Schiller Flexner filed a lawsuit in federal court in Florida accusing him and Ms. Bündchen of misleading investors. Other quarterbacks include comedian Larry David, NBA star Steph Curry and tennis player Naomi Osaka, all of whom have supported FTX.
“None of these defendants did their due diligence before selling these FTX products to the public,” the lawsuit states.
Some celebrities have narrowly escaped the crypto mess. Katy Perry, the pop star, was in talks for a partnership with FTX that never came to fruition, three people are familiar with the situation said.
Taylor Swift discussed a deal with FTX last spring that could pay up to $100 million, two people familiar with the matter said. Tour sponsorship was on the table after Ms. Swift has declined other promotion options, a person familiar with the talks said. The size of the deal was previously reported by The Telegraph. Financial Times.
Mister. Moskowitz, celebrity litigation lawyer, said in a podcast in April that Mr. Swift conducted due diligence on FTX, asking the exchange to prove that its cryptocurrencies were not non-registered securities. His comments caused a flurry of headlines about Mrs. Swift’s business acumen. But in an interview with The New York Times, M. Moskowitz said that he had no insider information about the negotiations.
In reality, Ms. Party Swift signed a sponsorship deal with FTX after more than six months of discussions, three people with knowledge of the deal said, and it was Mr. Swift. Bankman-Fried, who came out. A last-minute reversal left Ms. According to two people, Swift’s team is frustrated and disappointed.
Press Secretary Miss. Swift declined to comment.