At its peak, crypto giant FTX was so big it attracted celebrities like tennis pro Naomi Osaka and actor Larry David to promote its brand. Now its collapse is shining a critical light on the industry — and pulling the stars into a lawsuit, too.
A legal complaint filed this week in Miami accuses now-bankrupt FTX and its CEO Sam Bankman-Fried of deceiving consumers into investing.
The lawsuit, which has yet to be certified, also names 12 celebrity “brand ambassadors” as defendants, including Osaka, David, quarterback Tom Brady, model Giselle Bündchen, basketball player Shaquille O’Neal and Canadian businessman Kevin O’Leary.
But the celebrity-studded legal complaint is just one chapter in the saga of Bankman-Fried’s collapsing crypto exchange, which filed for bankruptcy on Nov. 11.
The three-year-old empire — FTX, FTX.US and a trading firm called Alameda Research — once valued at $32 billion US, is fast becoming another cautionary crypto tale.
Naomi Osaka’s outfit during the Miami Open tennis tournament in April displayed the FTX logo. (Wilfredo Lee/Associated Press)
Bankman-Fried has been oscillating from regretful to defiant in tweets posted from his home in the Bahamas, saying he will raise $8 billion to fix FTX and then telling a Vox reporter, “F*** regulators [they] make everything worse.”
The details of the meteoric fall of FTX are emerging in the bankruptcy process.
20) I was on the cover of every magazine, and FTX was the darling of Silicon Valley.<br><br>We got overconfident and careless.
John J. Ray, the new court-appointed CEO of FTX, says he has overseen many corporate failures in his 40-year career, including the liquidation of Enron, but said this week: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
London-based crypto blogger David Gerard spoke to CBC’s The Current on Friday and said Bankman-Fried came across as kind of a “nerdy, misunderstood trading genius.”
But behind the scenes bankruptcy filings now show FTX was shuffling money between entities — shoring each up with no backing, said Gerard.
“He knew he was broke. He was going out there nodding and smiling but knew FTX was a dead company,” Gerard told CBC.
As for the celebrity endorsements, Gerard said stars were likely well paid.
Larry David attends the premiere of HBO’s Curb Your Enthusiasm in 2017 in New York. David is one of 12 celebrities named in a lawsuit against FTX. (Charles Sykes/Invision/The Associated Press)
“It was a gig,” said Gerard.
And for investors, he said the draw was the promise “you could get rich for free. Who doesn’t want free money?”
FTX appeared strong and solvent, up until November.
But a balance sheet obtained first by the Financial Times and summarized in the Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware showed FTX had about $1 billion in cash or crypto currency backed by US dollars — which was offset by $9 billion US owed to customers.
Bankman-Fried attends the 2022 Forbes Iconoclast Summit via video on Nov. 3 in New York City. His cryptocurrency exchange FTX has since bled billions of dollars. (Arturo Holmes/Getty Images)
Ray, the new court-appointed CEO, calls the FTX situation “unprecedented” and says the company was in the control of a “very small group of inexperienced, unsophisticated and potentially compromised individuals.”
He calls Bankman-Fried’s ongoing tweets “erratic and misleading public statements.”
All this has left the cryptocurrency industry reeling.
“The more that gets uncovered, the more in awe those of us in the industry are about just how much of a cluster f— … it’s just a complete mess,” said Brian Mosoff, CEO of Toronto-based Ether Capital.
Mosoff says this crash will leave investors fearful.
“You just have this monumental collapse of this enormous and well-respected entity seemingly overnight. Everyone’s a little blindsided,” said Mosoff.
Binance and FTX logos are seen in this illustration. Bankman-Fried blamed himself for FTX’s losses and details of what happened are now emerging in U.S. bankruptcy court. (Dado Ruvic/Reuters)
Ironically, the ad Larry David filmed for FTX — in which his character is portrayed as foolish for rejecting crypto — now seems prescient.
The two-minute spot features David as a curmudgeonly character who travels through time, expressing disdain for inventions ranging from the wheel to coffee to the light bulb, insisting they’ll never catch on. At the end of the two-minute spot, he rejects FTX. Now David is accused of being culpable for Americans’ trust in FTX.
Celebs face damaged reputations
Dave Pouliot, lawyer and Montreal founder of Coinmiles, says he’s not sure if actors can be held accountable — but says they may think twice before endorsing another crypto-token-based venture.
“Their personal reputation risk is at stake here. I think these are actors, they’re being paid to endorse a brand publicly. So whether or not they could be found liable from a civil perspective, but reputational damage will be done. They are not likely to appear in another commercial of an investment nature,” said Pouliot.
His company does not take investor money, instead offering bitcoin rebates to users. But Pouliot says he’d like to see the industry moved to regulate itself, building in better protections and education.
Tampa Bay Buccaneers quarterback Tom Brady attends a news conference after a practice session in Munich, Germany, on Nov. 11. He is one of the celebrities named in a lawsuit against FTX. (Matthias Schrader/Associated Press)
Part of the problem with FTX, was how great its founder seemed.
Bankman-Fried is a former Massachusetts Institute of Technology physics student who had worked at Jane Street, an elite financial firm. After founding FTX he attracted top Silcon Valley investors and donated millions to politicians, pushing for regulatory change.
It was after the rival owner of the world’s largest exchange questioned FTX’s stability that cracks appeared.
There was a three-day panic sell-off costing FTX billions.
Binance head Changpeng Zhao considered buying FTX but fast backtracked, citing regulator concerns. But further industry regulation is futile, says Mosoff.
“You can tick off as many regulatory check boxes and paper filings as you want. If [bad actors] want to do something nefarious, they’ll find a way to do it,” said Mosoff.
Mosoff says the Mount Gox scandal — a Tokyo-based bitcoin exchange that imploded in 2014 — and Quadriga — the exchange whose founder Gerald Cotten died mysteriously in 2018 taking the keys to $250-million in crypto assets to the grave — did not scare people away for good.
He said the FTX saga will hopefully slow the flocks of “get-rich-quick” investors drawn by Bitcoin’s rise from $4,000 to a $70,000 high in 2020.
“People were blindly sending money in to buy these assets,” he said.
In the end, despite volatility, Mosoff believes when all the current drama shakes out, cryptocurrencies like bitcoin and ethereum will still retain their glitter.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
