The investigation aims to determine "what the promoters disclosed, how they were compensated, and how their promotions were scripted and filmed."
The Texas State Securities Board, a state government agency that regulates the investment securities industry in Texas and enforces the Texas Securities Act, is reportedly looking into investigating several celebrities, including Steph Curry and Tom Brady, for their promotions of bankrupt crypto exchange, FTX.
According to the news report shared by Bloomberg, the potential investigation was uncovered by the Texas State Securities Board Director of Enforcement, Joe Rotunda.
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The director of enforcement disclosed that the Texas State Securities Board is looking into FTX’s operations, including those involving celebrities. In particular, the Texas government agency “will be looking at what the promoters disclosed, how they were compensated and how their promotions were scripted and filmed.”
When talking about the investigation, the director of enforcement at the Texas State Securities Board, Joe Rotunda, noted:
It’s important from a securities regulation standpoint, and from a bankruptcy standpoint, to determine the ways FTX was encouraging clients and Texans to use FTX and invest with FTX.
However, Rotunda emphasized that the investigation of celebrity endorsement is not an “immediate priority,” but it would function as the “regulator's larger probe into FTX's collapse."
The investigation involves celebrities, like NBA Golden State Warriors player Steph Curry and NFL Tampa Bay Buccaneers player Tom Brady. Both athletes were also named in a class-action lawsuit filed on November 15th against now-bankrupt crypto exchange FTX.
The lawsuit claims that Brady, Curry, and other celebrities “controlled, promoted, assisted in, and actively participated” in West Realm Shires Services Inc and FTX Trading LTD. Moreover, it is claimed that celebrities used their endorsements to take advantage of “unsophisticated investors” in favor of FTX.
The class-action lawsuit names celebrities like NBA player Udonis Haslem, model Gisele Bundchen, and the Golden State Warriors basketball team.
Other celebrities have also faced various issues regarding crypto advertising. In October, Kim Kardashian received a fine from the United States Securities and Exchange Commission (SEC) for “touting on social media” about Ethereum Max native token, EMAX, without disclosing that she was paid $250,000 to promote it.