SBF Named in Deceptive Marketing Lawsuit

Case 1:22-cv-23983-BB Document 1 Entered on FLSD Docket 12/07/2022 Page 1 of 51
UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
CASE NO.
GREGG PODALSKY, et al., on behalf of

themselves and all others similarly situated,
Plaintiff, CLASS ACTION COMPLAINT
v. JURY DEMAND
SAM BANKMAN-FRIED, et al.,
Defendants.
/
CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL
“Then there’s things that have happened with Voyager and with FTX now —that’s somebody
running a company that’s just dumb as fu** greedy . So, what does Sam Bankman do? He
just, give me more, give me more, give me more, so I’m gonna borrow money, loan it to my
affiliated company, and hope and pretend to myself that the FTT tokens that are in there on
my balance sheet are gonna sustain their value.” 1
– Mark Cuban, Nov. 12, 2022
– Defendant Sam Bankman Fried (Former CEO, FTX)
1
https://www.yahoo.com/video/ftx-twitter-chaos-embarrassing-athletes-195343800.html (accessed
December 7, 2022).
Gregg Podalsky, et al. v. Samuel Bankman-Fried, et al.
Class Action Complaint and Demand for Jury Trial
Plaintiffs Gregg Podalsky, Gary Gallant, Skyler Lindeen, Alexander Chernyavsky, and David
Nicol (“Plaintiffs”) file this class action complaint on behalf of themselves, and all others similarly
situated, against Sam Bankman-Fried, Caroline Ellison, Gary Wang, Nishad Singh, Sam Trabucco,
Dan Friedberg, Tom Brady, Gisele Bundchen, Stephen Curry, Golden State Warriors, Shaquille
O’Neal, Udonis Haslem, David Ortiz, William Trevor Lawrence, Shohei Ohtani, Naomi Osaka,
Lawrence Gene David, and Kevin O’Leary (collectively, “Defendants”), all parties who either
controlled, promoted, assisted in, or actively participated in FTX Trading LTD d/b/a FTX’s (“FTX
Trading”) and West Realm Shires Services Inc. d/b/a FTX US’s (“FTX US”) (collectively, the “FTX
Entities”), offer and sale of unregistered securities in the form of yield-bearing accounts (“YBAs”) to
persons and entities residing both inside and outside of the United States, seeking to recover damages,
declaratory and/or injunctive relief stemming from the offer and sale of the FTX Entities’ yield-
bearing cryptocurrency accounts.
INTRODUCTION
1. Most experts agree that the FTX Collapse Disaster is the largest and greatest financial
fraud in history. The new CEO of FTX, who helped wind down the prior Enron fraud, admitted that
what he quickly uncovered in FTX to date, is worse than in the Enron Fraud. Almost $14 billion
dollars is unaccounted for, and certainly billions of dollars have been stolen from investors across the
globe. FTX will be involved in federal bankruptcy proceedings for many years to come and there is
no guarantee that the victims will be able to see any recovery from those processes.
2. One common and identical question in this case, and in many other cryptocurrency
litigation matters, is simply whether the SEC was correct, in finding that all of these YBAs are (or are
not) the sale of “unregistered securities.” This question can and should be decided quickly for all of
the parties, so that all cryptocurrency litigation can be quickly advanced and the victims (and alleged
co-conspirators) have a clear and expedited path.
3. Moreover, this question was already practically answered in the affirmative through
various regulatory statements, guidance, and actions issued by the Securities and Exchange
Commission and other regulatory entities. For example, on November 1, 2017, in the “SEC Statement
Urging Caution Around Celebrity Backed ICOs,” 2
2
https://www.sec.gov/news/public-statement/statement-potentially-unlawful-promotion-icos
(accessed December 7, 2022).
2
In the SEC’s Report of Investigation concerning The DAO, 3 the Commission warned
that virtual tokens or coins sold in ICOs may be securities, and those who offer and
sell securities in the United States must comply with the federal securities laws. Any
celebrity or other individual who promotes a virtual token or coin that is a security
must disclose the nature, scope, and amount of compensation received in exchange
for the promotion. A failure to disclose this information is a violation of the anti-
touting provisions of the federal securities laws. Persons making these
endorsements may also be liable for potential violations of the anti-fraud provisions
of the federal securities laws, for participating in an unregistered offer and sale of
securities, and for acting as unregistered brokers. The SEC will continue to focus on
these types of promotions to protect investors and to ensure compliance with the
securities laws.
4. Not only that, but the SEC and state securities regulators have also targeted
cryptocurrency brokers and exchanges just like FTX for offering almost this exact same type of
interest-bearing account, finding that exchanges such as BlockFi, 4 Voyager, 5 and Celsius 6 all offered
these same accounts as unregistered securities.
5. Another narrow issue that is common to the entire class, whose focus is solely
objective, is whether these Defendants violated state consumer laws by failing to abide by any of the
FTC long established rules and regulations, specifically on what is required for a celebrity endorsement
of crypto currency. The answer to just these two, narrow questions will greatly advance litigation
across the globe relating to the FTX Disaster, help determine who may be liable for aiding and abetting
this massive fraud, one way or another and may also help advance (for either side) all of the other
pending massive litigation, against other cryptocurrency platforms (such as Voyager) that offered
similar YBAs.
6. There can be no dispute that claims in this case must provide for strict liability, and
therefore if these YBAs are found to be “securities,” Defendants can simply have no defense to the
claims in this action. The “caveat emptor” defense that Defendants and others are pushing in
the press will have no application.
3
https://www.sec.gov/litigation/investreport/34-81207.pdf (accessed December 7, 2022)
4
https://www.sec.gov/news/press-release/2022-26 (accessed December 7, 2022).
5
https://coingeek.com/6-us-regulators-crackdown-on-voyager-digital-over-interest-bearing-
accounts/ (accessed December 7, 2022).
6
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved
=2ahUKEwjvjNvg27j7AhWfRTABHfwzDe4QFnoECAsQAQ&url=https%3A%2F%2Fwww.nj.go
v%2Foag%2Fnewsreleases21%2FCelsius-Order-9.17.21.pdf&usg=AOvVaw0Zd94fuhFSsOoGKM-
vQ3YI (accessed December 7, 2022).
3
7. This is not a case where Plaintiffs made a “risky” investment in stock or
cryptocurrency, or that they lost money speculating on various cryptocurrency projects. Plaintiffs’
claims arises simply from the purchase of a YBA, an account with FTX that every customer who
signed up for the FTX app received by default, and which, as explained below, was guaranteed to
generate returns on their significant holdings in the accounts, regardless of whether those assets were
held as USD, legal tender or cryptocurrency, and regardless of whether any trades were made with the
assets held in the YBA. In other words, the YBA was portrayed to be like a bank account, something
that was “very safe” and “protected.” That is the narrative that Defendants pushed in promoting the
offer and sale of the YBAs, which are unregistered securities. For that, Defendants are liable for
Plaintiffs’ losses, jointly and severally and to the same extent as if they were themselves the FTX
Entities.
8. Literally overnight, Plaintiffs’ assets held in their YBAs on the Deceptive FTX
Platform were robbed from them as FTX imploded and former-CEO, Sam Bankman-Fried, filed a
Chapter 11 bankruptcy petition in Delaware on an emergency basis. This happened because, as
explained by the new CEO of the failed FTX Entities:
I have over 40 years of legal and restructuring experience. I have been the
Chief Restructuring Officer or Chief Executive Officer in several of the largest
corporate failures in history. I have supervised situations involving allegations of
criminal activity and malfeasance (Enron). I have supervised situations involving novel
financial structures (Enron and Residential Capital) and cross-border asset recovery
and maximization (Nortel and Overseas Shipholding). Nearly every situation in which
I have been involved has been characterized by defects of some sort in internal
controls, regulatory compliance, human resources and systems integrity.
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. From compromised systems integrity and faulty regulatory oversight abroad, to
the concentration of control in the hands of a very small group of inexperienced,
unsophisticated and potentially compromised individuals, this situation is
unprecedented .
See In re: FTX Trading Ltd, et al., No. 22-11068 (JTD), ECF No. 24, ¶¶ 4–5 (D. Del. Nov. 17, 2022)
(emphasis added).
9. This should not have happened. Not to Plaintiffs, and not to the thousands of other
FTX customers who now find themselves in the same predicament.
10. The Cryptocurrency National Disaster is growing by the billions almost every day.
More crypto companies are filing new federal bankruptcy petitions each day, all running for protection
from the billions of dollars of losses they directly caused to thousands of investors here in Florida and
4
across the globe. This is by far the largest securities national disaster, greatly surpassing the Madoff
Ponzi Scheme, and could very likely become a complex international litigation disaster, similar to how
the hundreds of thousands of asbestos cases swamped all courts across the globe. Unless a workable,
coordinated, and organized structure is established now, at the very onset of these proceedings, here
in Miami, which served as the epicenter for the crypto fraud, the FTX victims will continue to suffer
and the only people to benefit will be the professionals in the bankruptcy and civil courts.
11. The Deceptive and failed FTX Platform emanated from Miami, Florida and was based
upon false representations and deceptive conduct. FTX’s fraudulent scheme was designed to take
advantage of unsophisticated investors from across the globe, who utilize mobile apps to make their
investments. As a result, consumers around the globe collectively sustained billions of dollars in
damages. FTX organized and emanated its fraudulent plan from its worldwide headquarters located
here in Miami, Florida. Miami became the “hot spot” for crypto companies, hosting the most
investments in crypto startups as well as the annual Bitcoin Miami 2022 Global Forum. Several crypto
companies, including crypto exchange Blockchain.com, Ripple and FTX.US, moved their
headquarters to Miami. Others, including fellow exchange eToro, expanded their U.S. presence with
offices in Miami. FTX was already very familiar with Miami, signing a deal worth more than $135
million dollars for the naming rights of the waterfront arena, where 3-time NBA Champions the Miami
Heat play.
FACTUAL BACKGROUND
12. On December 24, 2021, counsel for Plaintiffs and the proposed class members
brought the first (and only) putative nationwide class action complaint against the now-defunct
cryptocurrency trading app, Voyager, styled Mark Cassidy v. Voyager Digital Ltd., et al., Case No. 21-
24441-CIV-ALTONAGA/Torres (the “Cassidy Action”), alleging that the platform owned and
operated by Voyager Digital Ltd. (“Voyager”) and Voyager Digital LLC (“VDL”) was an unregulated
and unsustainable fraud. In the Cassidy Action, plaintiffs also alleged that Defendant Ehrlich, Voyager’s
CEO, teamed up with Defendants Cuban and the Dallas Mavericks to promote Voyager, by making
false representations and employing other means of deception. As a result, the Voyager plaintiffs and
Voyager class members, all sustained losses in excess of $5 billion.
13. The allegations in the Cassidy complaint—and specifically Mark Cuban’s role in
promoting Voyager—received national attention. See https://www.jdsupra.com/legalnews/new-
lawsuits-target-cryptocurrency-9604406/ (summarizing the allegations and explaining that “Mark
Cuban, owner of the NBA’s Dallas Mavericks, is a major stakeholder in Voyager. The complaint
5
alleges that he made comments at a press conference in which he specifically targeted unsophisticated
investors ‘with false and misleading promises of reaping large profits in the cryptocurrency market.’”);
https://www.law.com/dailybusinessreview/2021/12/29/mark-cuban-linked-crypto-platform-hit-
with-florida-nationwide-class-action-lawsuit-in-miami-federal-court/?slreturn=20220701214901
(same, in the Daily Business Review).
14. After the Cassidy Complaint was filed, the following important actions took place:
(a) the United States Securities and Exchange Commission (SEC) began
an enforcement review focused on whether Voyager’s Earn Program
Accounts (“EPAs”) constitute unregistered securities;
(b) seven state Attorneys General (New Jersey, Alabama, Kentucky,
Oklahoma, Texas, Vermont and Washington) took specific action
finding that Voyager was violating their state laws, including issuing
“cease and desist” letters to Voyager, finding that the EPA was an
unregistered security, prohibiting the crypto-asset broker-dealer from
selling any more unregistered securities (finding that Voyager used
these EPAs to raise millions of dollars in revenue worldwide as of
March 1, 2022; and
(c) on March 29, 2002, the State of New Jersey Bureau of Securities
entered a Cease and Desist Order against Voyager, finding that the
EPA was not exempt from registration under the law, and instead that
it must be registered—and as a result, Voyager’s stock price tanked by
25% in a day and is down over 80% for the year. 7
15. On July 5, 2022, Voyager Digital Holdings, Inc. and two affiliated debtors
(collectively, the “Debtors”) filed voluntary petitions for relief under chapter 11 of Title 11 of the
United States Code. Voyager’s bankruptcy cases (the “Voyager Bankruptcy Cases”) are jointly
administered under Case No. 22-10943 before the Honorable Michael E. Wiles in the United States
Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).
16. On September 28, 2022, Voyager filed a motion in the Voyager Bankruptcy Cases
seeking authority to enter into an asset purchase agreement with West Realm Shires Inc., d/b/a FTX
US whereby Voyager will sell substantially all of its assets for a purchase price of approximately $1.422
billion, which includes (i) the value of cryptocurrency on the Voyager platform as of a date to be
7
https://seekingalpha.com/article/4498956-voyager-digital-plunged-25-percent-heres-why (accessed
October 28, 2022); https://seekingalpha.com/article/4503716-voyager-digital-buy-dip-during-
crypto-crash (accessed December 7, 2022).
6
determined, which, as of September 26, 2022, is estimated to be $1.311 billion, plus (ii) additional
consideration which is estimated to provide at least approximately $111 million of incremental value
to the Debtors’ estates.
17. Everyone involved in the Voyager Bankruptcy Cases thought that the FTX Entities
were the deus ex machina come to save the day by bailing out Voyager and paying back at least some of
the losses the Voyager customers sustained.
18. Instead, as explained below, the FTX Entities imploded, their over $30 billion in value
evaporated almost overnight, and the FTX Entities found themselves filing their own emergency
Chapter 11 bankruptcy petition in Delaware. The Deceptive FTX Platform maintained by the FTX
Entities was truly a house of cards, a Ponzi scheme where the FTX Entities shuffled customer funds
between their opaque affiliated entities, using new investor funds obtained through investments in the
YBAs and loans to pay interest to the old ones and to attempt to maintain the appearance of liquidity.
19. Part of the scheme employed by the FTX Entities involved utilizing some of the
biggest names in sports and entertainment to raise funds and drive global consumers to invest in the
YBAs, which were offered and sold largely from the FTX Entities’ domestic base of operations here
in Miami, Florida, pouring billions of dollars into the Deceptive FTX Platform to keep the whole
scheme afloat.
20. Importantly, although Defendants disclosed their partnerships with the FTX Entities,
they have never disclosed the nature, scope, and amount of compensation they personally received in
exchange for the promotion of the Deceptive FTX Platform, which the SEC has explained that a
failure to disclose this information would be a violation of the anti-touting provisions of the federal
securities laws. 8 Moreover, none of these defendants performed any due diligence prior to marketing
these FTX products to the public.
21. The SEC took action against boxing champ Floyd Mayweather and music producer
DJ Khaled after they were paid by cryptocurrency issuers to tweet promotional statements about
investing in Initial Coin Offerings (ICOs), ordering them both to pay disgorgement, penalties and
interest for promoting investments in ICOs, including one from cryptocurrency issuer Centra Tech,
8
https://www.ubergizmo.com/2017/11/sec-celebrities-disclose-payment-cryptocurrency-
endorsements/#:~:text=It%20has%20issued%20a%20statement%20warning%20celebrities%20tha
t,without%20disclosing%20that%20they%E2%80%99ve%20been%20paid%20for%20it (accessed
December 7, 2022).
7
Inc, for a combined total of $767,500 because they failed to disclose that their promotional efforts on
Twitter were paid endorsements. 9
22. Other celebrities similarly accused and prosecuted for failing to disclose their paid
endorsements include Kim Kardashian and basketball player Paul Pierce. 10 According to the Federal
Trade Commission, cryptocurrency scams have increased more than ten-fold year-over-year with
consumers losing more than $80 million since October 2020, due in large part to the use of such
celebrity endorsements. 11
23. As explained more fully in this Complaint, Defendants’ misrepresentations and
omissions made and broadcast around the globe through the television and internet render them liable
to Plaintiff and class members for soliciting their purchases of the unregistered YBAs. Wildes v.
Bitconnect Int’l PLC, No. 20-11675 (11th Cir. Feb. 18, 2022) (holding that promoters of cryptocurrency
through online videos could be liable for soliciting the purchase of unregistered securities through
mass communication, and no “personal solicitation” was necessary for solicitation to be actionable).
24. This action seeks to hold Defendants responsible for the many billions of dollars in
damages they caused Plaintiff and the Class and to force Defendants to make them whole.
PARTIES
25. Plaintiff Gregg Podalsky is a citizen and resident of Florida. He is a natural person
over the age of 21 and is otherwise sui juris. Plaintiff Podalsky purchased an unregistered security from
FTX in the form of a YBA and funded the account with a sufficient amount of crypto assets to earn
interest on his holdings. Plaintiff Podalsky did so after being exposed to some or all of Defendants’
misrepresentations and omissions regarding the Deceptive FTX Platform as detailed in this complaint,
and/or executed trades on the Deceptive FTX Platform in reliance on those misrepresentations and
omissions. As a result, Plaintiff Podalsky has sustained damages for which Defendants are liable.
26. Plaintiff Skyler Lindeen is a citizen and resident of Florida. He is a natural person over
the age of 21 and is otherwise sui juris. Plaintiff Lindeen purchased an unregistered security from FTX
in the form of a YBA and funded the account with a sufficient amount of crypto assets to earn interest
9
https://news.bloomberglaw.com/us-law-week/insights-celebrity-endorsements-and-
cryptocurrency-a-cautionary-tale (accessed December 7, 2022).
10
https://blockbulletin.com/news/altcoins/kim-kardashian-among-other-celebrities-sued-for-
promoting-cryptocurrencies/ (accessed December 7, 2022).
11
https://florida.foolproofme.org/articles/770-celebrity-cryptocurrency-scam (accessed December
7, 2022).
8
on his holdings. Plaintiff Lindeen did so after being exposed to some or all of Defendants’
omissions. As a result, Plaintiff Lindeen has sustained damages for which Defendants are liable.
27. Plaintiff Alexander Chernyavsky is a citizen and resident of Florida. He is a natural
person over the age of 21 and is otherwise sui juris. Plaintiff Chernyavsky purchased an unregistered
security from FTX in the form of a YBA and funded the account with a sufficient amount of crypto
assets to earn interest on his holdings. Plaintiff Chernyavsky did so after being exposed to some or all
of Defendants’ misrepresentations and omissions regarding the Deceptive FTX Platform as detailed
in this complaint, and/or executed trades on the Deceptive FTX Platform in reliance on those
misrepresentations and omissions. As a result, Plaintiff Chernyavsky has sustained damages for which
Defendants are liable.
28. Plaintiff Gary Gallant is a citizen and resident of Canada. He is a natural person over
the age of 21 and is otherwise sui juris. Plaintiff Gallant purchased an unregistered security from FTX
in the form of a YBA and funded the account with a sufficient amount of crypto assets to earn interest
on his holdings. Plaintiff Gallant did so after being exposed to some or all of Defendants’
omissions. As a result, Plaintiff Gallant has sustained damages for which Defendants are liable.
29. Plaintiff David Nicol is a citizen and resident of Sydney, Australia. He is a natural
person over the age of 21 and is otherwise sui juris. Plaintiff Nicol purchased an unregistered security
from FTX in the form of a YBA and funded the account with a sufficient amount of crypto assets to
earn interest on his holdings. Plaintiff Nicol did so after being exposed to some or all of Defendants’
omissions. As a result, Plaintiff Nicol has sustained damages for which Defendants are liable.
30. Defendant Thomas Brady, NFL quarterback currently playing for the Tampa Bay
Buccaneers, is a brand ambassador of FTX, and is a citizen and resident of Miami-Dade County,
Florida.
31. Defendant Gisele Bundchen, one of the world’s highest-paid models and a brand
ambassador for FTX, is a citizen and resident of Miami-Dade County, Florida.
9
32. Defendant Kevin O’Leary, “Mr. Wonderful,” a businessman, television personality
appearing regularly on Shark Tank, and brand ambassador for FTX, is a citizen and resident of Miami
Beach, Florida.
33. Defendant Udonis Haslem, an American professional basketball player for the Miami
Heat of the NBA and brand ambassador of FTX, is a citizen and resident of Miami-Dade County,
Florida.
34. Defendant David Ortiz, former designated hitter and first baseman in the MLB and a
brand ambassador for FTX, is a citizen and resident of the State of Florida.
35. Defendant Sam Bankman-Fried, founder and former CEO of FTX and former
billionaire, is a citizen and resident of the Bahamas.
36. Defendant Caroline Ellison is the former CEO of Alameda Research, LLC, a trading
firm launched by Defendant Sam Bankman-Fried. She oversaw many of the risky bets Alameda took
with regard to FTX customers’ crypto tokens. Defendant Ellison is a resident of Hong Kong.
37. Defendant Sam Trabucco, the former Co-CEO of Alameda Research, LLC, is a citizen
and resident of the State of California.
38. Defendant Gary Wang, co-founder of Alameda Research and FTX, upon information
and belief is currently residing in the Bahamas.
39. Defendant Nishad Singh, the former Director of Engineering of FTX, upon
information and belief is currently residing in the Bahamas.
40. Defendant Dan Friedberg, the former Chief Compliance Officer of FTX, is a citizen
and resident of Seattle, Washington.
41. Defendant Stephen Curry, professional basketball player for the Golden State
Warriors of the NBA and brand ambassador for FTX, is a citizen and resident of the State of
California.
42. Defendant Golden State Warriors LLC is a professional basketball team in the NBA
that officially launched their partnership with FTX in 2022 with the unveiling of the FTX logo on the
court at the Chase Center, and is a corporation operating and existing under the laws of the State of
California.
43. Defendant Shaquille O’Neal, former professional NBA basketball star, sports analyst,
entrepreneur, and FTX brand ambassador, is a citizen and resident of Collin County, Texas.
44. Defendant William Trevor Lawrence, the quarterback for the Jacksonville Jaguars of
the NFL and a brand ambassador for FTX, is a citizen and resident of the state of Mississippi.
10
45. Defendant Shohei Ohtani, a professional baseball pitcher, designated hitter and
outfielder for the Los Angeles Angels of the MLB and a brand ambassador for FTX, is a citizen and
resident of the State of California.
46. Defendant Naomi Osaka, a professional tennis player and brand ambassador for FTX,
is a citizen and resident of Beverly Hills, California.
47. Defendant Lawrence Gene David, an American comedian, writer, actor, television
producer, and FTX brand ambassador, is a citizen and resident of Los Angeles, California.
JURISDICTION AND VENUE
48. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §
1332(d)(2)(A) because this is a class action for a sum exceeding $5,000,000.00, exclusive of interest
and costs, and in which at least one class member is a citizen of a state different than the Defendants.
49. This Court has personal jurisdiction against Defendants because they conduct business
in Florida, and/or have otherwise intentionally availed themselves of the Florida consumer market
through the promotion, marketing, and sale of FTX’s YBAs in Florida, which constitutes committing
a tortious act within the state of Florida. Defendants have also marketed and participated and/or
assisted in the sale of FTX’s unregistered securities to consumers in Florida. This purposeful availment
renders the exercise of jurisdiction by this Court over Defendants permissible under traditional
notions of fair play and substantial justice.
50. Venue is proper in this District under 28 U.S.C. § 1391 because thousands of Class
Members either reside in this District; Defendants engaged in business in this District; a substantial
part of the events or omissions giving rise to the claims at issue occurred in this District; and because
Defendants entered into transactions and/or received substantial profits from Class Members who
reside in this District.
51. All conditions precedent to the institution and maintenance of this action have been
performed, excused, waived, or have otherwise occurred.
FACTUAL ALLEGATIONS
A. Background on FTX and its Key Players.
52. Until seeking the protection of the Bankruptcy Court, the FTX Entities operated a
multi-billion-dollar mobile application cryptocurrency investment service (the “Deceptive FTX
Platform”) that placed cryptocurrency trade orders on behalf of users like Plaintiff and Class Members
and offered interest bearing cryptocurrency accounts.
11
Defendant Sam Bankman-Fried
53. The FTX group of companies (FTX Group or FTX) was founded in 2019 and began
as an exchange or marketplace for the trading of crypto assets. FTX was established by Samuel
Bankman-Fried, Gary (Zixiao) Wang and Nishad Singh, with operations commencing in May 2019.
FTX was purportedly established in order to build a digital asset trading platform and exchange for
the purpose of a better user experience, customer protection, and innovative products. FTX built the
FTX.com exchange to develop a platform robust enough for professional trading firms and intuitive
enough for first-time users.
54. Prior to that, The Silicon Valley-born, MIT-educated Bankman-Fried, also known as
SBF, launched his quantitative crypto trading firm, Alameda Research, in November 2017, 12 after
stints in the charity world and at trading firm Jane Street. 13 Quantitative trading consists of trading
strategies based on quantitative analysis, which rely on mathematical computations and number
crunching to identify trading opportunities.
Defendants Caroline Ellison and Sam Trabucco
55. By 2018, Defendant Bankman-Fried had persuaded Defendant Ellison to join him at
Alameda Research. Defendant Ellison described the recruitment as follows: “This was very much like, ‘oh,
yeah, we don’t really know what we’re doing,’“ Ellison told Forbes magazine in an interview regarding her
initial impressions of Alameda.
56. In late 2018, the headquarters of Alameda Research was relocated to Hong Kong. The
team at Alameda Research included Defendant Bankman-Fried’s close friends (and later co-founders for
FTX) Nishad Singh and Gary Wang. Defendant Caroline Ellison and Sam Trabucco were also part of the
group and upon moving to Hong Kong the group lived like college students and fiercely traded crypto.
57. After Defendant Bankman-Fried established FTX in 2019, Defendant Ellison began
taking more responsibility at Alameda Research along with Sam Trabucco, who served as CEO.
58. In October 2021, Ellison was appointed as co-CEO of Alameda with Sam Trabucco after
Bankman-Fried resigned from the firm in an effort to put distance between the exchange and trading shop he
founded. As co-CEO, Trabucco helped oversee Alameda’s expansion beyond its initial market-neutral, but
relatively low-profit business as a market maker for low-volume cryptocurrencies into riskier trading strategies,
according to a Twitter thread detailing that shift. For instance, he said Alameda traders began exploring yield
12
https://www.businessinsider.com/ftx-crypto-king-sam-bankman-fried-rise-and-fall-2022-11
13
https://www.businessinsider.com/ftx-sbf-crypto-saga-explained-what-happened-what-it-means-
2022-11?inline-endstory-related-recommendations= (accessed December 7, 2022).
12
farming in decentralized finance (DeFi). Ellison became sole CEO in August 2022, following Trabucco’s
departure from the firm, when he shifted his role from Co-CEO to adviser of the company. 14
59. Leading up to the collapse of FTX, Ellison lived with nine other FTX or Alameda colleagues
in Bankman-Fried’s $30 million penthouse in the Bahamas. She reportedly paid SBF rent, and was occasionally
in a romantic relationship with him. In 2021, Ellison tweeted about recreational stimulant use. Upon
information and belief, Ellison left the Bahamas and moved back to Hong Kong.
60. “Young people tend to be too risk averse,” Ellison said in a more recent Alameda podcast
episode. 15
61. The Wall Street Journal recently reported that Ellison told Alameda staffers in a video call that
she was one of four people (along with Sam Bankman-Fried, Gary Wang, and Nishad Singh) who were aware
of the decision to send FTX customer funds to Alameda, to help the fund meet its liabilities. 16
Defendant Gary Wang
62. Wang is not like his co-founder Sam Bankman-Fried, who loves fame and putting
himself at the center of public attention. In fact, there’s little public information about Wang, who has
been described as a shady but critical player in the rise and fall of FTX.
63. Wang met Bankman-Fried at a math camp in high school. Later, they became college
roommates at the Massachusetts Institute of Technology, where Wang got degrees in mathematics
and computer science and Bankman-Fried received a bachelor’s in physics. 17
64. Before co-founding Alameda Research (and later FTX), Wang worked at Google. He
claims to have built a system to aggregate prices across public flight data, according to an introduction
on the Future Fund’s website. 18 When Bankman-Fried left the Jane Street Hedge Fund to start
Alameda in 2017, Wang left the tech giant.
65. The startup has its beginnings in a three-bedroom Berkeley apartment – the downstairs
served as its office. The firm shifted to Hong Kong, in part to take advantage of arbitrage opportunities
in Asian bitcoin markets – including the price discrepancy between BTC in Japan and BTC everywhere
else.
14
https://www.coindesk.com/business/2022/08/24/co-ceo-of-crypto-trading-firm-alameda-
research-sam-trabucco-steps-down/ (accessed December 7, 2022).
15
https://www.youtube.com/watch?v=zfcb9JAgWBs (accessed December 7, 2022).
16
https://www.wsj.com/articles/alameda-ftx-executives-are-said-to-have-known-ftx-was-using-
customer-funds-11668264238 (accessed December 7, 2022).
17
https://blog.ftx.com/blog/raising-the-bar/ (accessed December 7, 2022)
18
https://ftxfuturefund.org/about/ (accessed December 7, 2022).
13
66. It’s there that Wang and Bankman-Fried funneled funds from Alameda to build its
bespoke derivatives exchange. Bankman-Fried told Insider that he is not a good coder: “I don’t code.
I’m trash. I have not written any of FTX’s code base. That’s all a lot of other really impressive people
at FTX. That’s not me at all.” 19
67. Nishad Singh, the head of engineering at FTX, said Wang was a “really good mentor”
who offered suggestions and advice to push things out on short timescales.
68. In the aftermath of FTX’s collapse, and the subsequent $400 million hack, questions
are circulating around who could possibly have abused client funds. Wang is a prominent suspect, as
one of the few people with “root access” to the exchange’s code base, according to The Block. 20
69. Wang is also one of the board members of FTX Future Fund – the charity guided by
“effective altruism” that aims to “use reason and evidence to do the most good possible for the most
people.”
70. Wang, one of the 10 roommates in Bankman-Fried’ luxury penthouse in the Bahamas,
is reportedly among the four people cited by Caroline Ellison who knew about the decision to send
customer funds to Alameda, according to people who spoke to the Wall Street Journal. 21
71. A few Wang photos are circulating on the internet, though little else is known about
the mysterious co-founder who preferred to stay in the shadows as SBF chased the limelight. In a now
infamous picture on FTX’s website, CTO Wang is seen with his back facing the camera as he focuses
on the monitors in front of him.
72. At the age of 28, Wang topped Forbes’ 2022 list of the world’s billionaires under 30
with a net worth of $5.9 billion in April. SBF sent his congratulations to Wang in public, tweeting that
“I couldn’t be prouder” when the list came out. 22
19
https://www.businessinsider.com/crypto-trading-billionaire-sam-bankman-fried-ftx-alameda-
surprising-facts-2021-12#5-people-often-think-hes-a-programmer-but-hes-not-5 (accessed
December 7, 2022).
20
https://www.theblock.co/post/186476/who-is-billionaire-ftx-co-founder-gary-wang-and-why-is-
he-still-committing-code (accessed December 7, 2022).
21
customer-funds-11668264238?mod=latest_headlines (accessed December 7, 2022).
22
https://twitter.com/SBF_FTX/status/1511324242612297738?ref_src=twsrc%5Etfw%7Ctwcamp
%5Etweetembed%7Ctwterm%5E1511324242612297738%7Ctwgr%5E8e0ce65ea02f827b72be96dd
e8f9484a3ba3e41c%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.usatoday.com%2Fstory%2
Fmoney%2F2022%2F04%2F05%2Fcryptocurrency-ceo-donate-charity%2F7272175001%2F
14
73. Wang is reportedly now “under supervision” by Bahamian authorities along with
Bankman-Fried and Singh. 23
Defendant Nishad Singh
74. Nishad Singh joined Alameda Research in the early days, when the five-person trading
firm was based in a Berkeley, California, apartment. He went from finding and exploiting arbitrage
opportunities in crypto markets to being appointed director of engineering at FTX.
75. Singh is thought to be a close confidant of Bankman-Fried, having shared multiple
apartments with the FTX founder over the years, including most recently a 10-person luxury
penthouse in Nassau, the Bahamas.
76. He is rumored to be just one of three people who controlled the keys to the exchange’s
matching engine, and may have been informed of a plan to backstop losses at Alameda with FTX
customer funds. 24
77. Although Singh’s LinkedIn profile is down and his Twitter account is locked, the
University of California, Berkeley graduate talked about why he left his dream job at Facebook to join
Alameda Research in a FTX podcast. 25
78. “I spent maybe about a month doing weekends and nights at Alameda,” he said,
discussing a period of time when his “day job” was as a software engineer working on applied machine
learning at Facebook. “At some point, it became obvious that was kind of stupid … so I took some
time off and really gave my 100% working at Alameda,” Singh said.
79. Singh visited Alameda in the first month of its existence, where he witnessed
Bankman-Fried execute a sequence of trades that he described as “super profitable, easy to understand
and there were lots available.” Feeling inspired, he took a job.
80. In the podcast, Singh said he was also attracted to the company’s cultural commitment
to effective altruism, 26 a movement that “aims to find the best ways to help others,” which he
discovered in college.
23
https://cointelegraph.com/news/sam-bankman-fried-is-under-supervision-in-bahamas-looking-
to-flee-to-dubai (accessed December 7, 2022).
24
25
https://www.youtube.com/watch?v=rl0Rq2cUSIQ (accessed December 7, 2022).
26
https://www.coindesk.com/layer2/2022/11/11/how-sam-bankman-frieds-effective-altruism-
blew-up-ftx/ (accessed December 7, 2022).
15
81. Singh is a board member of FTX Future Fund, a part of the FTX Foundation, a
philanthropic collective funded principally by Bankman-Fried and other senior FTX executives.
82. “It was pretty clear that everybody working [at Alameda] was highly motivated, was
sort of effective altruism-aligned, which mattered a lot to me and was really [a] bright spot. I could
learn a lot from them,” Singh said in the podcast.
83. After spending one and a half years as a core Alameda engineer, Singh took a role as
the head of engineering at the then-newly launched FTX derivative exchange in 2019, where he was
allowed to code with “minimal supervision.” He has provided code to a number of Bankman-Fried-
related projects, including the decentralized exchange Serum on Solana.
84. “Nishad was one of my brother’s best friends in high school. He’s shown the fastest
and most sustained professional growth I’ve ever witnessed,” Bankman-Fried wrote in a company
blog. 27 Singh also reportedly built most of FTX’s “technological infrastructure” and managed the
development team.
85. Although pitched as a community-run and- organized exchange, people familiar with
the matter told CoinDesk the true power over Serum rested with FTX Group, which then held the
program’s access keys. 28 A similar relationship may be in place at FTX’s core properties. 29
86. Singh is reportedly now “under supervision” by Bahamian authorities along with
Bankman-Fried and Wang. 30
Dan Friedberg
87. Daniel S. Friedberg was the chief compliance officer at FTX, the person who oversaw
FTX’s compliance initiatives before it imploded. He joined the firm in March 2020, and was
instrumental in perpetuating its nefarious activities, in part by helping to cover up any indications that
the FTX scheme was unraveling.
88. Although Friedberg was supposed to be the adult in the room overseeing the
operations of the FTX empire, he did so thousands of miles away, remotely, from Seattle, Washington.
As FTX’s chief regulatory officer, Friedberg was tasked with monitoring customer protection
27
https://blog.ftx.com/blog/raising-the-bar/ (accessed December 7, 2022).
28
https://www.coindesk.com/business/2022/11/12/ftx-hack-spooks-solana-defi-community-
igniting-revolution-at-alameda-controlled-serum-dex/ (accessed December 7, 2022).
29
30
https://cointelegraph.com/news/sam-bankman-fried-is-under-supervision-in-bahamas-looking-
to-flee-to-dubai (accessed December 7, 2022).
16
practices, ensuring product offerings complied with existing rules and overseeing internal audits
and reviews. He did none of this.
89. Friedberg has also been tied to an online poker scandal in 2008, where Ultimate Bet’s
founder Russ Hamilton was accused of installing a “God mode” on his gambling platform that only
certain players had access to – resulting in an estimated $50 million in misappropriated funds.
90. In a surreptitiously recorded file, Friedberg reportedly advised Hamilton to claim he
was a victim of the Ultimate Bets “God mode” scam, and push blame on an unnamed consultant to
the company who exploited the site’s servers. The audio recordings were published in 2013 under
uncertain circumstances and have not been independently verified by CoinDesk.
91. “I did take this money and I’m not trying to make it right, Dan, so we gotta get that
out of the way right away, real quick,” Hamilton allegedly said in the audio recording. 31 Hamilton also
founded the World Champion online poker platform.
92. Veteran short seller Marc Cohodes, one of the few to publicly question the rapid rise
of FTX before its fall in a September interview with trading-focused webcast Hedgeye, 32 had noted
the potential conflicts of hiring someone connected to a cheating scandal to oversee compliance at
the $32 billion FTX exchange.
93. Similarly here, Dan Friedberg in his role as Chief Compliance Officer oversaw both
FTX and Alameda, which had its own “god mode,” i.e., Alameda was secretly exempted from FTX’s
auto-liquidation protocols.
94. Friedberg’s penchant for duplicity to make legal problems vanish for his corporate
paymasters didn’t end with UB’s demise. NBC News recently reported on a 2020 incident involving
SBF’s promotion of the Ethereum-based Cover Protocol and the unfortunate experience of one Dave
Mastrianni, an investor who was prevented from cashing out his $400,000 in paper winnings due to
“insufficient liquidity” on FTX before the COVER token cratered.33
95. When Mastrianni contacted FTX to accuse SBF of having a “pump and dump” role
in the debacle, Friedberg called back with an offer. How would Mastrianni, a graphic artist, like a job
creating NFTs for FTX? Friedberg offered Mastrianni an ‘adviser’ contract that would pay him one
31
http://craakker.blogspot.com/2013/05/pokers-watergate-moment.html (accessed December 7,
2022).
32
https://app.hedgeye.com/insights/122943-marc-cohodes-ftx-is-dirty-rotten-to-the-core-hedgeye-
investing-s?with_category=17-insights (accessed December 7, 2022).
33
https://www.nbcnews.com/news/epic-fall-sam-bankman-fried-was-hailed-crypto-genius-clients-
saw-smoke-rcna56583 (accessed December 7, 2022).
17
BTC for 30 days’ work, but it also required Mastrianni to absolve FTX, Alameda, and its affiliates of
any responsibility for Mastrianni’s COVER losses.
96. Mastrianni eventually agreed, but while he did receive that one BTC, FTX never
accepted any of his artwork. Freidberg later emailed to inform him that the payment “was primarily
for your release of all claims” and, with that goal accomplished, FTX had no more reason to maintain
this subterfuge.
97. In August, the Federal Deposit Insurance Corporation (FDIC) sent a letter to
Friedberg and then-FTX US CEO Brett Harrison to “cease and desist” using marketing language that
could have been erroneously interpreted as saying that exchange users accounts were ensured by the
federal banking regulator. Harrison subsequently deleted the tweet.
98. Before joining FTX, Friedberg was a partner at Fenwick & West LLP, where he led
the law firm’s cryptocurrency division, according to a now-deprecated LinkedIn page. He received a
JD and MBA degree from the University of Wisconsin-Madison.
B. The Rise and Fall of FTX.
99. The FTX.com exchange was extremely successful since its launch. This year around
$15 billion of assets are traded daily on the platform, which now represents approximately 10% of
global volume for crypto trading. The FTX team has grew to over 300 globally. Although the FTX
Entities’ primary international headquarters is in the Bahamas, its domestic US base of operations is
located in Miami, Florida. 34
100. FTX quickly became one of the most utilized avenues for nascent investors to
purchase cryptocurrency. By the time FTX filed for bankruptcy protection, customers had entrusted
billions of dollars to it, with estimates ranging from $10-to-$50 billion dollars .
101. Bankman-Fried got rich off FTX and Alameda, with the two companies netting $350
million and $1 billion in profit, respectively, in 2020 alone, according to Bloomberg.
102. At his peak, Bankman-Fried was worth $26 billion. At 30, he had become a major
political donor, gotten celebrities like the Co-Defendants in this action to vociferously promote FTX,
and secured the naming rights to the arena where the NBA’s Miami Heat play. 35
34
https://www.coindesk.com/business/2022/09/27/crypto-exchange-ftx-is-moving-its-us-
headquarters-from-chicago-to-miami/ (accessed December 7, 2022).
35
18
103. In early November 2022, crypto publication CoinDesk released a bombshell report
that called into question just how stable Bankman-Fried’s empire really was. 36
104. Bankman-Fried’s cryptocurrency empire was officially broken into two main parts:
FTX (his exchange) and Alameda Research (his trading firm), both giants in their respective industries.
But even though they are two separate businesses, the division breaks down in a key place: on
Alameda’s balance sheet, which was full of FTX – specifically, the FTT token issued by the exchange
that grants holders a discount on trading fees on its marketplace. While there is nothing per se
untoward or wrong about that, it shows Bankman-Fried’s trading giant Alameda rests on a foundation
largely made up of a coin that a sister company invented, not an independent asset like a fiat currency
or another crypto. The situation adds to evidence that the ties between FTX and Alameda are
unusually close. 37
105. After obtaining this information, Changpeng “CZ” Zhao, the CEO of Binance,
decided to liquidate roughly $530 million-worth of FTT. Customers also raced to pull out, and FTX
saw an estimated $6 billion in withdrawals over the course of 72 hours, which it struggled to fulfill. 38
The value of FTT plunged 32%, but rallied once again with Bankman-Fried’s surprise announcement
on Tuesday, November 8th, that Binance would buy FTX, effectively bailing it out. 39
106. The next day, Binance announced that it was withdrawing from the deal, citing findings
during due diligence, as well as reports of mishandled customer funds and the possibility of a federal
investigation. 40 The news sent FTT plunging even further — Bankman-Fried saw 94% of his net
36
37
https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-
empire-blur-on-his-trading-titan-alamedas-balance-sheet/ (accessed December 7, 2022).
38
https://markets.businessinsider.com/news/currencies/ftx-6-billion-withdrawals-72-hours-sam-
bankman-fried-binance-2022-11 (accessed December 7, 2022).
39
https://markets.businessinsider.com/news/currencies/ftx-6-billion-withdrawals-72-hours-sam-
bankman-fried-binance-2022-11 (accessed December 7, 2022).
40
https://markets.businessinsider.com/news/currencies/ftx-crash-sec-cftc-probes-asset-liability-
shortfall-6-billion-2022-11 (accessed December 7, 2022).
19
worth wiped out in a single day. 41 On November 11th, unable to obtain a bailout, FTX filed for
Chapter 11 bankruptcy and Bankman-Fried resigned as CEO. 42
107. Following his resignation, Bankman-Fried issued a 22-tweet-long explanation of where
he believed he and the FTX Entities went wrong: 43
41
https://www.businessinsider.com/ftx-ceo-crypto-binance-sam-bankman-fried-wealth-wiped-out-
2022-11 (accessed December 7, 2022).
42
https://markets.businessinsider.com/news/currencies/ftx-bankruptcy-sam-bankman-fried-ceo-
crypto-binance-alameda-markets-2022-11 (accessed December 7, 2022).
43
https://twitter.com/SBF_FTX/status/1590709189370081280 (accessed December 7, 2022).
20
21
22
23
24
25
108. According to a recent Reuters report, however, another explanation contributing to

the precarious house of cards that was the Deceptive FTX Platform is that earlier this year, Bankman-
Fried secretly transferred at least $4 billion in customer funds from FTX to Alameda without telling
anyone, after Alameda was hit with a series of losses, and that the FTX entities lent more than half of
its $16 billion in customer funds to Alameda in total, with more than $10 billion in loans
outstanding . 44
C. FTX’s offer and sale of YBAs, which are unregistered securities.
109. Beginning in 2019, the FTX Entities began offering interest-bearing cryptocurrency
accounts to public investors. Plaintiff and other similarly situated individuals invested in FTX’s YBAs.
110. FTX maintains that it does not offer for sale any product that constitutes a “security”
under federal or state law. Under federal securities laws as construed by the United States Supreme
Court in its decision SEC v. W.J. Howey Co., 328 U.S. 293 (1946) and by the SEC, an investment
contract is a form of security under United States securities laws when (1) the purchaser makes an
investment of money or exchanges another item of value (2) in a common enterprise (3) with the
reasonable expectation of profits to be derived from the efforts of others.
111. The YBAs were “securities” as defined by the United States securities laws and as
interpreted by the Supreme Court, the federal courts, and the SEC. The FTX Entities offered variable
interest rewards on crypto assets held in the YBAs on the Deceptive FTX Platform, which rates were
determined by the FTX Entities in their sole discretion. In order to generate revenue to fund the
promised interest, the FTX Entities pooled the YBA assets to engage in lending and staking activities
from which they derived revenue to pay interest on the YBAs. These activities make the YBAs a
“security” under state and federal law.
44
https://markets.businessinsider.com/news/currencies/ftx-crash-client-funds-alameda-binance-
sbf-sec-cftc-probe-2022-11?utm_medium=ingest&utm_source=markets (accessed December 7,
2022).
26
112. On October 14, 2022, Director of Enforcement of the Texas State Securities Board,
Joseph Rotunda, filed a declaration in the Chapter 11 bankruptcy proceedings pending in connection
with the collapse of the Voyager Digital cryptocurrency exchange, In re: Voyager Digital Holdings, Inc., et
al., Case No. 22-10943 (MEW), ECF No. 536 (Bankr. S.D.N.Y. Oct. 14, 2022), in which he explained
how the YBAs are in fact “an offering of unregistered securities in the form of yield-bearing accounts
to the residents of the United States.” Id., at 6. In his declaration, the pertinent portions of which are
reproduced in full for ease of reference, Rotunda explains:
I am also familiar with FTX Trading LTD (“FTX Trading”) dba FTX as described
herein. As more fully explained throughout this declaration, I am aware that FTX Trading,
along with West Realm Shires Services Inc. dba FTX US (“FTX US”), may be offering
unregistered securities in the form of yield-bearing accounts to residents of the United States.
These products appear similar to the yield-bearing depository accounts offered by Voyager
Digital LTD et al., and the Enforcement Division is now investigating FTX Trading, FTX US,
and their principals, including Sam Bankman-Fried.
I understand that FTX Trading is incorporated in Antigua and Barbuda and
headquartered in the Bahamas. It was organized and founded in part by Mr. Bankman-Fried,
and FTX Trading appears to be restricting operations in the United States. For example,
domestic users accessing the webpage for FTX Trading at ftx.com are presented with a pop-up
window that contains a disclaimer that reads in part as follows:
Did you mean to go to FTX US? FTX US is a US licensed
cryptocurrency exchange that welcomes American users.
You’re accessing FTX from the United States. You won’t be able to use
any of FTX.com’s services, though you’re welcome to look around the site.
FTX US claims to be regulated as a Money Services Business with FinCEN (No.
31000195443783) and as a money transmitter, a seller of payment instruments and in other
non-securities capacities in many different states. It is not, however, registered as a money
transmitter or in any other capacity with the Texas Department of Banking and it is not
registered as a securities dealer with the Texas State Securities Board.
FTX US owns 75 percent or more of the outstanding equity of FTX Capital Markets
(CRD No. 158816) (“FTX Capital”), a firm registered as a broker-dealer with the United States
Securities and Exchange Commission, the Financial Industry Regulatory Authority Inc., and
53 state and territorial securities regulators. FTX Capital’s registration as a dealer in Texas
became effective on May 7, 2012, and the registration continues to remain in force and effect.
27
FTX US maintains a website at https://ftx.us that contains a webpage for smartphone
applications for FTX (formerly Blockfolio) 45 (the “FTX Trading App”) and FTX US Pro. Users
appear able to click a link in this webpage to download the FTX Trading App even when they
reside in the United States.
On October 14, 2022, I downloaded and installed the FTX Trading App on my
smartphone. I created an account with FTX Trading through the FTX Trading App and linked
the FTX account to an existing personal bank account. During the process, I provided my full
first and last name and entered my residential address in Austin, Texas. I also accessed
hyperlinks in the FTX Trading App that redirected to the Privacy Policy and Terms of Service.
Although I was from the United States and was using the application tied to FTX Trading, the
Privacy Policy and Terms of Service were from FTX US - not FTX Trading.
I thereafter used the FTX Trading App to initiate the transfer of $50.00 from my bank
account to the FTX account and then transferred .1 ETH from a 3.0 wallet to the FTX account.
The transfer of funds from my bank account to the FTX account will take up to six days to
complete but the transfer of ETH was processed within a few minutes.
The FTX Trading App showed that I was eligible to earn a yield on my deposits. It
also explained the “Earn program is provided by FTX.US” – not FTX Trading. It also
represented that “FTX Earn rewards are available for US users on a promotional basis.”
I recall the FTX Trading App’s default settings were automatically configured to
enable the earning of yield. The application also contained a link for additional information
about yield. I accessed the link and was redirected to a recent article published by “Blockfolio
Rebecca” under help.blockfolio.com. The article began as follows:
You can now earn yield on your crypto purchases and deposits, as well as your
fiat balances, in your FTX Trading App! By opting in and participating in staking
your supported assets in your FTX account, you’ll be eligible to earn up to 8%
APY on your staked assets. THIS APY IS ESTIMATED AND NOT
GUARANTEED AS DESCRIBED BELOW.
The article also described the payment of yield. It contained a section titled How do
you calculate APY? Does my balance compound daily? that read, in part, as follows:
FTX will deposit yield earnings from the staked coins, calculated hourly,
on the investment portfolio that is stored in your FTX Trading App. Yield will be
compounded on principal and yield you have already earned. Any cryptocurrency
45
Based upon information and belief, FTX Trading acquired Blockfolio LLC (“Blockfolio”) in or
around August 2020. At the time, Blockfolio managed a cryptocurrency application. FTX Trading
appears to have thereafter rebranded Blockfolio and its smartphone application as FTX. Now, users
can download the FTX Trading App from Apple’s App Store or Google’s Google Play Store.
Although FTX rebranded Blockfolio, the application listing in Apple’s App Store still shows the
application with developed by Blockfolio.
28
that you have deposited on FTX as well as any fiat balance you may have on your
account, will earn yield immediately after you have opted into the program.
The first $10,000 USD value in your deposit wallets will earn 8% APY.
Amounts held above $10,000 up to $10MM USD in value (subject to market
fluctuations) will earn 5% APY. In this scenario, your yield earned on the coins
will look something like the examples below the table.
The article also contained a section titled Is this available in my country? This section
explained that “FTX Trading App Earn is available to FTX Trading App customers that are in
one of the FTX permitted jurisdictions.” It contained a hyperlink to an article titled Location
Restrictions published by FTX Crypto Derivatives Exchange under help.ftx.com. This article
described various restrictions on operations in certain countries and locations and read in part
as follows:
FTX does not onboard or provide services to corporate accounts of

entities located in, established in, or a resident of the United States of America,
Cuba, Crimea and Sevastopol, Luhansk People’s Republic, Donetsk People’s
Republic, Iran, Afghanistan, Syria, or North Korea. FTX also does not
onboard corporate accounts located in or a resident of Antigua or Barbuda. FTX
also does not onboard any users from Ontario, and FTX does not permit non-
professional investors from Hong Kong purchasing certain products.
FTX does not onboard or provide services to personal accounts of
current residents of the United States of America, Cuba, Crimea and
Sevastopol, Luhansk People’s Republic, Donetsk People’s Republic, Iran,
Afghanistan, Syria, North Korea, or Antigua and Barbuda. There may be
partial restrictions in other jurisdictions, potentially including Hong Kong,
Thailand, Malaysia, India and Canada. In addition, FTX does not onboard any
users from Ontario, does not permit non-professional investors from Hong Kong
purchasing certain products, and does not offer derivatives products to users from
Brazil.
FTX serves all Japanese residents via FTX Japan.
(emphasis in original)
Despite the fact I identified myself by name and address, the FTX Trading App now
shows that I am earning yield on the ETH. The yield is valued at 8 percent APR.
Based upon my earning of yield and an ongoing investigation by the Enforcement
Division of the Texas State Securities Board, the yield program appears to be an investment
contract, evidence of indebtedness and note, and as such appears to be regulated as a security
in Texas as provided by Section 4001.068 of the Texas Securities Act. At all times material to
the opening of this FTX account, FTX Trading and FTX US have not been registered to offer
or sell securities in Texas. FTX Trading and FTX US may therefore be violating Section
4004.051 of the Texas Securities Act. Moreover, the yield program described herein has not
been registered or permitted for sale in Texas as generally required by Section 4003.001 of the
Securities Act, and as such FTX Trading and FTX US may be violation Section 4003.001 by
offering unregistered or unpermitted securities for sale in Texas. Finally, FTX Trading and FTX
29
US may not be fully disclosing all known material facts to clients prior to opening accounts
and earning yield, thereby possibly engaging in fraud and/or making offers containing
statements that are materially misleading or otherwise likely to deceive the public. Certain
principals of FTX Trading and FTX US may also be violating these statutes and disclosure
requirements. Further investigation is necessary to conclude whether FTX Trading, FTX US
and others are violating the Securities Act through the acts and practices described in this
declaration.
The Enforcement Division of the Texas State Securities Board understands that FTX
US placed the highest bid for assets of Voyager Digital LTD et al., a family of companies
variously accused of misconduct in connection with the sale of securities similar to the yield
program promoted by FTX Trading and FTX US. FTX US is managed by Sam Bankman-Fried
(CEO and Founder), Gary Wang (CTO and Founder) and Nishad Singh (Head of Engineering).
The same principals hold the same positions at FTX Trading, and I was able to access the yield-
earning product after following a link to the FTX Trading App from FTX US’s website. The
FTX Trading App also indicated the Earn program is provided by FTX US. As such, FTX US
should not be permitted to purchase the assets of the debtor unless or until the Securities
Commissioner has an opportunity to determine whether FTX US is complying with the law and
related and/or affiliated companies, including companies commonly controlled by the same
management, are complying with the law.
I hereby authorize the Texas Attorney General’s Office and any of its representatives
to use this declaration in this bankruptcy proceeding.
I declare under penalty of perjury that the foregoing is true and correct.
Executed on October 14, 2022 in Austin, Texas.
/s Joseph Jason Rotunda
By: Joseph Jason Rotunda
D. The Defendants Aggressively Marketed the FTX Platform
113. In addition to the conduct of Defendant Sam Bankman-Fried, as described in this
Complaint, some of the biggest names in sports and entertainment have either invested in FTX or
been brand ambassadors for the company. A number of them hyped FTX to their social media fans,
driving retail consumer adoption of the Deceptive FTX Platform.
114. In April 2021, FTX became the first company in the crypto industry to name an arena.
This helped lend credibility and recognition to the FTX brand and gave the massive fanbase of
basketball exposure to the Deceptive FTX Platform.
30
115. FTX’s explanation for using stars like Brady, Bunchden, and the other Defendants
was no secret. “We’re the newcomers to the scene,” said then-FTX.US President Brett Harrison,
referring to the crypto services landscape in the U.S. “The company needs to familiarize consumers
with its technology, customer service and offerings, while competing with incumbents like Coinbase
Global Inc. or Kraken,” Mr. Harrison said. “We know that we had to embark on some kind of mass
branding, advertising, sponsorship type work in order to be able to do that,” he said. 46
116. In other words, the FTX Entities needed celebrities like Defendants to continue
funneling investors into the FTX Ponzi scheme, and to promote and substantially assist in the sale of
the YBAs, which are unregistered securities. Below are representative statements and advertisements
Defendants made to drive the offers and/or sales of the YBAs, which Plaintiff and Class Members
will supplement as the case progresses and discovery unfolds.
i. Defendants Tom Brady and Gisele Bundchen
117. The star quarterback and the businesswoman and model, then a couple, became FTX
ambassadors last year. They also took equity stakes in FTX Trading Ltd.
118. Mr. Brady and Ms. Bündchen also joined the company’s $20-million ad campaign in
2021. They filmed a commercial called “FTX. You In?” showing them telling acquaintances to join
the FTX platform. The ad can be viewed here: https://www.youtube.com/watch?v=uymLJoKFlW8
46
https://www.wsj.com/articles/tom-brady-and-gisele-bundchen-to-star-in-20-million-campaign-
for-crypto-exchange-11631116800?mod=article_inline (accessed December 7, 2022).
31
ii. Defendant Kevin O’Leary
119. “Mr. Wonderful,” both a brand ambassador and an FTX shareholder, made several
public statements designed to induce consumers to invest in the YBAs.
120. “To find crypto investments opportunities that met my own rigorous standards of
compliance, I entered into this relationship with @FTX_Official,” Mr. O’Leary said on Twitter last
year. Mr. O’Leary recently deleted the tweet.
121. He also served as a judge for the FTX Charity Hackathon in Miami in March of 2022. 47
122. And very recently, on October 12, 2022, O’Leary stated confidently that FTX was
totally compliant and a safe place to hold assets. O’Leary stated that: “I have to disclose I’m a paid
spokesperson to a FTX and shareholder there, too, cause we mentioned him and I’m a big advocate
for Sam because he has two parents who are compliance lawyers. If there’s ever a place I could be
that I’m not gonna get in trouble it’s going to be in FTX so you know that’s there they’re great people
but he gets the job in compliance which is why he’s working so hard to get regulation.” 48
47
https://ftxcharityhackathon.com/ (accessed December 7, 2022).
48
See https://www.youtube.com/watch?v=iwD_zWgyUz8 beginning at 17:32 (accessed December 7,
2022)
32
123. He went on to state that “[t]here are a lot of signs right now that point to things looking
bad. Crypto has taken a big hit and investors are wondering if things will turn around. If you follow
history and the pattern of things, you know that this is RIGHT ON TRACK and we’ll soon see a
resurgence with crypto. Do you think we’re entering a Bullish period? Let me know in the
comments!” 49
iii. Defendant Udonis Haslem
124. Udonis Haslem, the Captain of the Miami HEAT and Miami legend, became an FTX
global ambassador. Much like Brady and Bunchden, Haslem starred in FTX’s “You In, Miami?” ad
campaign that launched at the start of the 2021 - 2022 Miami HEAT season.
125. In the ad, which be viewed here: https://www.youtube.com/watch?v=83FDP53yPa8,
Haslem states “FTX has arrived in 305. So I just got one question: Are you in, Miami?” Others respond
“If he’s in, I’m in.” Haslem concludes “Our city. Our team. FTX. You in, Miami?”
49
Id.
33
iv. Defendant David Ortiz
126. Defendant David Ortiz, who became an FTX brand ambassador and hyped the YBAs
in exchange for cryptocurrency and multiple collections of NFTs, also ran his own FTX “You In?”
ad, which began running nationwide during the first game of the 2021 World Series.
127. In the ad, which can be found here: https://www.ispot.tv/ad/qSlm/ftx-big-papi-is-
in, Ortiz is watching a game on the television when he receives a phone call from The Moon. Inspired
by the “moonblast” home run scored on the field, The Moon frantically tells David about
opportunities to get into cryptocurrency with FTX. David decides it’s an offer he can’t refuse and
joins fellow sports stars Stephen Curry and Tom Brady on the platform. FTX announces it is the
official crypto exchange of MLB.
34
v. Defendant Steph Curry
128. Defendant Stephen Curry had his own nationwide ad campaign pushing the Deceptive
FTX Platform, known as the “#notanexpert” campaign. 50 Throughout the ad, Curry repeatedly denies
being cast as an expert in cryptocurrency, culminating in his statement that “I’m not an expert, and I
don’t need to be. With FTX I have everything I need to buy, sell, and trade crypto safely. ” 51
129. The purpose of Curry being an ambassador is to expand the reach of the crypto firm
and “tout the viability of cryptocurrency to new audiences around the world,” FTX said in a press
release. 52 In other words, to drive adoption of the Deceptive FTX Platform and to facilitate the sales
of unregistered YBAs to unsuspecting and unwitting retail consumers.
130. “I’m excited to partner with a company that demystifies the crypto space and
eliminates the intimidation factor for first-time users,” Curry said in the statement, highlighting that
“first-time,” inexperienced users were the intended targets of the campaign. 53
50
https://www.youtube.com/watch?v=gsy2N-XI04o (accessed December 7, 2022).
51
Id.
52
https://www.prnewswire.com/news-releases/nba-superstar-stephen-curry-becomes-global-
ambassador-and-shareholder-of-leading-cryptocurrency-exchange-ftx-through-long-term-
partnership-301370497.html (accessed December 7, 2022).
53
Id.
35
vi. Defendant Golden State Warriors
131. The Golden State Warriors and FTX officially launched their partnership in 2022 with
the unveiling of the FTX logo on the court at the Chase Center. As the Warriors’ Official
Cryptocurrency Platform and NFT Marketplace, the franchise dropped NFTs on FTX.us beginning
in early 2022. The partnership between the Warriors and FTX marked the first international rights
partner for the Warriors, meaning the GSW and FTX had a visible market presence, inclusive of logo
and likeness, internationally.
132. The deal also included the Warriors’ G League team, the Golden Guardians and
Warriors Gaming Squad (affiliated esports teams), in-arena signage at Chase Center, and virtual floor
signage at Warriors games. 54
54
https://www.instagram.com/p/CYiBaq8JLx7/ (accessed December 7, 2022).
36
vii. Defendant Shaquille O’Neal
133. Defendant Shaquille O’Neal, former professional NBA basketball star, sports analyst,
and entrepreneur, also became an FTX ambassador, stating in a video posted on FTX’s Twitter
account that “I’m excited to be partnering with FTX to help make crypto accessible for everyone. I’m
all in. Are you?” 55
55
https://twitter.com/FTX_Official/status/1532119977381208066?s=20&t=5wTm55FDE6c0cCD9
vCndYg (accessed December 7, 2022).
37
viii. Defendant Trevor Lawrence
134. Defendant William Trevor Lawrence, the first pick in the 2021 NFL draft and now
quarterback for the Jacksonville Jaguars of the NFL, became a brand ambassador for FTX in exchange
for unspecified cryptocurrency payments, which sponsorship was announced in April 2021. 56 The
stated purpose of the sponsorship was because “Trevor is someone people can have a personal and
human connection with for [FTX] and to the crypto space.” 57
56
https://twitter.com/ftx_app/status/1386667859393253376 (accessed December 7, 2022).
57
https://www.forbes.com/sites/chriscason/2021/04/26/trevor-lawrence-makes-first-investment-
move-with-first-of-its-kind-partnership-with-blockfolio/?sh=7190ee6f47ef (accessed December 7,
2022).
38
ix. Defendant Shohei Ohtani
135. The FTX Entities entered into a long-term partnership with global icon and history-
making MLB Superstar Shohei Ohtani. In addition to being an FTX global ambassador, Mr. Ohtani
received all of his compensation in equity and cryptocurrencies. 58 In exchange for those unspecified
payments, Mr. Ohtani served as a spokesperson for FTX to increase awareness of the Deceptive FTX
Platform and to drive adoption of and investments in the unregistered YBA securities on a global
scale through a variety of initiatives. 59
58
https://www.prnewswire.com/news-releases/mlb-superstar-shohei-ohtani-joins-ftx-as-global-
ambassador-through-long-term-partnership-301425911.html (accessed December 7, 2022).
59
Id.
39
x. Defendant Naomi Osaka
136. Defendant Naomi Osaka, a 24-year-old professional tennis player and four-time
Grand Slam singles champion, became a brand ambassador for FTX, with the express purpose of
“getting more women to start investing in crypto.” 60 Osaka wore the FTX logo on the kit she wore at
tournaments, including the 2022 Miami Open. 61 In exchange for an equity stake in FTX and payments
in unspecified amounts of cryptocurrency, Osaka directed and produced content in association with
the FTX Entities designed to promote the offer and sale of the unregistered YBA securities, hoping
“she will reach a global audience.” 62
137. Osaka confirmed her involvement by tweeting a glitzy new FTX ad to her 1.1 million
followers, which can be viewed here: https://youtu.be/pkuf8avR50k. It shows the tennis star
competing in a comic strip — and over dramatic music, she says: “They thought they made the rules
for us. They thought they could control us. They were wrong.”
138. The video then cuts to a boardroom full of marketing executives talking about the ad
in a tongue-in-cheek way — and discussing other ideas… including Osaka heading to the moon. An
60
https://coinmarketcap.com/alexandria/article/naomi-osaka-tennis-star-teams-up-with-ftx-and-
she-s-getting-paid-in-crypto-too (accessed December 7, 2022).
61
Id.
62
Id.
40
idea to have a QR code bouncing around the screen (a clear nod to Coinbase’s Super Bowl spot) is
dismissed for being “boring.”
139. They settle on letting Osaka speaking for herself — and play a mock-up of the tennis
ace giving an interview to a news channel where she says: “I’m Naomi Osaka and I’m proud to partner
with FTX. Making cryptocurrency accessible is a goal that FTX and I are striving towards.” The ad
ends with the tagline: “Naomi is in. You in?”
xi. Defendant Larry David
140. For his part, the legendary comedian and creator of Seinfeld and Curb Your Enthusiasm,
Larry David, created an ad for the FTX Entities called “Don’t Miss Out on Crypto,” which aired
during the 2022 Super Bowl, making FTX one of the most retweeted brands during the Super Bowl,
and winning the “Most Comical” honorific from USA Today’s Ad Meter. 63
141. The ad—the only Super Bowl commercial David ever appeared in—featured David
being a skeptic on such historically important inventions as the wheel, the fork, the toilet, democracy,
the light bulb, the dishwasher, the Sony Walkman, and, of course, FTX, and cautioned viewers, “Don’t
be like Larry.” The ad can be viewed here: https://youtu.be/BH5-rSxilxo
63
https://admeter.usatoday.com/lists/usa-today-ad-meter-replay-ratings-2022-final-results/
41
CLASS ACTION ALLEGATIONS
142. As detailed below in the individual counts, Plaintiff brings this lawsuit on behalf of
himself and all others similarly situated, pursuant to Rule 23(a), (b)(2), (b)(3), and/or (c)(4) of the
Federal Rules of Civil Procedure.
A. Class Definitions
143. Plaintiffs seek to represent the following Global Class, Nationwide Class, and Florida
Subclass (“the Classes”):
(1) Global Class: All persons and entities residing outside of the
United States who, within the applicable limitations period,
purchased or enrolled in a YBA.
(2) Nationwide Class: All persons or entities in the United States
who, within the applicable limitations period, purchased or
enrolled in a YBA.
(3) Florida Subclass: All persons or entities in the state of Florida
who, within the applicable limitations period, purchased or
enrolled in a YBA.
Excluded from the Classes are Defendants and their officers, directors, affiliates, legal representatives,
and employees, the FTX Entities and their officers, directors, affiliates, legal representatives, and
employees, any governmental entities, any judge, justice, or judicial officer presiding over this matter
and the members of their immediate families and judicial staff.
144. Plaintiffs reserve the right to modify or amend the definition of the proposed Classes,
or to include additional classes or subclasses, before or after the Court determines whether such
certification is appropriate as discovery progresses. Plaintiff seeks certification of the Classes in part
because all offers of FTX YBAs to Plaintiff and the Class Members (in which Defendants each
substantially participated) were made by FTX from their principal place of business in Miami, Florida,
and thus every single offer to sell an FTX YBA stems from a transactional occurrence that emanated
from the State of Florida.
B. Numerosity
145. The Classes are comprised of thousands, if not millions, of consumers globally, to
whom FTX offered and/or sold YBAs. Moreover, thousands, if not millions, of consumers worldwide
have executed trades on the FTX Platform within the applicable limitations period. Membership in
the Classes are thus so numerous that joinder of all members is impracticable. The precise number of
42
class members is currently unknown to Plaintiff but is easily identifiable through FTX’s corporate
records.
C. Commonality/Predominance
146. This action involves common questions of law and fact, which predominate over any
questions affecting individual class members. These common legal and factual questions include, but
are not limited to, the following:
(a) whether the YBAs were unregistered securities under federal or Florida law;
(b) whether Defendants’ participation and/or actions in FTX’s offerings and sales of
YBAs violate the provisions of the Securities Act and Florida securities law.
(c) the type and measure of damages suffered by Plaintiff and the Class.
(a) whether Defendants’ practices violate the FDUTPA;
(b) whether Plaintiff and Class members have sustained monetary loss and the proper
measure of that loss;
(c) whether Plaintiff and Class members are entitled to injunctive relief;
(d) whether Plaintiff and Class members are entitled to declaratory relief; and
(e) whether Plaintiff and Class members are entitled to consequential damages, punitive
damages, statutory damages, disgorgement, and/or other legal or equitable appropriate
remedies as a result of Defendants’ conduct.
D. Typicality
147. Plaintiff’s claims are typical of the claims of the members of the Class because all
members were injured through the uniform misconduct described above, namely that Plaintiff and all
class members were offered and/or sold FTX’s YBAs because of Defendants’ actions and/or
participation in the offering and sale of these unregistered securities, and Plaintiff is advancing the
same claims and legal theories on behalf of himself and all such members. Further, there are no
defenses available to either Defendant that are unique to Plaintiff.
E. Adequacy of Representation
148. Plaintiff will fairly and adequately protect the interests of the members of the Class.
Plaintiff has retained counsel experienced in complex consumer class action litigation, and Plaintiff
intends to prosecute this action vigorously. Plaintiff has no adverse or antagonistic interests to those
of the Class. Plaintiff anticipates no difficulty in the management of this litigation as a class action. To
prosecute this case, Plaintiff has chosen the undersigned law firms, which has the financial and legal
43
resources to meet the substantial costs and legal issues associated with this type of consumer class
litigation.
F. Requirements of Fed. R. Civ. P. 23(b)(3)
149. The questions of law or fact common to Plaintiff’s and each Class member’s claims
predominate over any questions of law or fact affecting only individual members of the Class. All
claims by Plaintiff and the unnamed members of the Class are based on the common course of
conduct by Defendants (1) in marketing, offering, and/or selling the YBAs, which are unregistered
securities, and/or (2) in receiving secret undisclosed compensation for their promotion of the
Deceptive FTX Platform.
150. Common issues predominate when, as here, liability can be determined on a class-wide
basis, even when there will be some individualized damages determinations.
151. As a result, when determining whether common questions predominate, courts focus
on the liability issue, and if the liability issue is common to the Class as is in the case at bar, common
questions will be held to predominate over individual questions.
G. Superiority
152. A class action is superior to individual actions for the proposed Class, in part because
of the non-exhaustive factors listed below:
(a) Joinder of all Class members would create extreme hardship and inconvenience for
the affected customers as they reside nationwide and throughout the state;
(b) Individual claims by Class members are impracticable because the costs to pursue
individual claims exceed the value of what any one Class member has at stake. As a
result, individual Class members have no interest in prosecuting and controlling
separate actions;
(c) There are no known individual Class members who are interested in individually
controlling the prosecution of separate actions;
(d) The interests of justice will be well served by resolving the common disputes of
potential Class members in one forum;
(e) Individual suits would not be cost effective or economically maintainable as individual
actions; and
(f) The action is manageable as a class action.
44
H. Requirements of Fed. R. Civ. P. 23(b)(2)
153. Defendants have acted and refused to act on grounds generally applicable to the classes
by engaging in a common course of conduct of aiding and abetting the offering and/or selling the
YBAs, which are unregistered securities, thereby making appropriate final injunctive relief or
declaratory relief with respect to the classes as a whole.
154. Defendants have acted and refused to act on grounds generally applicable to the classes
by engaging in a common course of conduct of uniformly identical and uniform misrepresentations
and omissions in receiving secret undisclosed compensation for their promotion of the Deceptive
FTX Platform, thereby making appropriate final injunctive relief or declaratory relief with respect to
the classes as a whole.
I. Requirements of Fed. R. Civ. P. 23(c)(4)
155. As it is clear that one of the predominant issues regarding Defendants’ liability is
whether the YBAs FTX offered and/or sold are unregistered securities, utilizing Rule 23(c)(4) to
certify the Class for a class wide adjudication on this issue would materially advance the disposition of
the litigation as a whole.
156. As it is clear that another predominant issue regarding Defendants’ liability is whether
they have violated the consumer protection and securities laws of Florida in making identical and
uniform misrepresentations and omissions regarding the functionality of the Deceptive FTX Platform,
and/or in receiving secret undisclosed compensation for their promotion of the Deceptive FTX
Platform, utilizing Rule 23(c)(4) to certify the Class for a class wide adjudication on this issue would
materially advance the disposition of the litigation as a whole.
J. Nature of Notice to the Proposed Class.
157. The names and addresses of all Class Members are contained in the business records
maintained by FTX and are readily available to FTX. The Class Members are readily and objectively
identifiable. Plaintiff contemplates that notice will be provided to Class Members by e-mail, mail, and
published notice.
45
COUNT ONE
Violations of the Florida Statute Section 517.07,
The Florida Securities and Investor Protection Act
(Plaintiffs Individually and on behalf of the Classes)
158. Plaintiffs repeat and re-allege the allegations contained in paragraphs 1–157 above, as
if fully set forth herein.
159. Section 517.07(1), Fla. Stat., provides that it is unlawful and a violation for any person
to sell or offer to sell a security within the State of Florida unless the security is exempt under Fla.
Stat. § 517.051, is sold in a transaction exempt under Fla. Stat. § 517.061, is a federally covered security,
or is registered pursuant to Ch. 517, Fla. Stat.
160. Section 517.211 extends liability to any “director, officer, partner, or agent of or for
the seller, if the director, officer, partner, or agent has personally participated or aided in making the
sale, is jointly and severally liable to the purchaser in an action for rescission, if the purchaser still owns
the security, or for damages, if the purchaser has sold the security.”
161. The YBA is a security pursuant to Fla. Stat. § 517.021(22)(a).
162. The YBAs sold and offered for sale to Plaintiff and Class members were not:
a. exempt from registration under Fla. Stat. § 517.051;
b. a federal covered security;
c. registered with the Office of Financial Regulations (OFR); or
d. sold in a transaction exempt under Fla. Stat. § 517.061.
163. The FTX Entities sold and offered to sell the unregistered YBAs to Plaintiffs and the
members of the Class.
164. Defendants are directors, officers, partners and/or agents of the FTX Entities
pursuant to Fla. Stat. § 517.211.
165. The FTX Entities, with Defendants’ material assistance, offered and sold the
unregistered YBAs to Plaintiffs and the members of the Class. As a result of this assistance,
Defendants violated Fla. Stat. § 517.07 et seq. and Plaintiffs and members of the Class sustained
damages as herein described.
46
COUNT TWO
For Violations of the Florida Deceptive and Unfair Trade Practices Act,
§ 501.201, Florida Statutes, et seq.
167. This cause of action is brought pursuant to the Florida Deceptive and Unfair Trade
Practices Act, section 501.201, Fla. Stat., et seq. (“FDUTPA”). The stated purpose of the FDUTPA is
to “protect the consuming public . . . from those who engage in unfair methods of competition, or
unconscionable, deceptive, or unfair acts or practices in the conduct of any trade or commerce.” §
501.202(2), Fla. Stat.
168. Plaintiffs and Class members are consumers as defined by section 501.203, Fla. Stat.
Defendants are engaged in trade or commerce within the meaning of the FDUTPA.
169. Florida Statute section 501.204(1) declares unlawful “[u]nfair methods of competition,
unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade
or commerce.”
170. Defendants’ unfair and deceptive practices as described herein are objectively likely to
mislead – and have misled – consumers acting reasonably in the circumstances.
171. Defendants have violated the FDUTPA by engaging in the unfair and deceptive
practices as described herein, which offend public policies and are immoral, unethical, unscrupulous
and injurious to consumers.
172. Plaintiffs and consumers in the Classes have been aggrieved by Defendants’ unfair and
deceptive practices and acts of false advertising by paying into the Ponzi scheme that was the
Deceptive FTX Platform and in the amount of their lost investments.
173. The harm suffered by Plaintiffs and consumers in the Classes was directly and
proximately caused by the deceptive and unfair practices of Defendants, as more fully described
herein.
174. Pursuant to sections 501.211(2) and 501.2105, Fla. Stat., Plaintiffs and consumers in
the Classes make claims for actual damages, attorneys’ fees and costs.
175. Defendants still utilize many of the deceptive acts and practices described above.
Plaintiffs and the other members of the Classes have suffered and will continue to suffer irreparable
47
harm if Defendants continue to engage in such deceptive, unfair, and unreasonable practices. Section
501.211(1) entitles Plaintiffs and the Classes to obtain both declaratory or injunctive relief to put an
end to Defendants’ unfair and deceptive scheme.
COUNT THREE
Civil Conspiracy
177. The FTX Entities and Defendants made numerous misrepresentations and omissions
to Plaintiffs and Class Members about the Deceptive FTX Platform in order to induce confidence
and to drive consumers to invest in what was ultimately a Ponzi scheme, misleading customers and
prospective customers with the false impression that any cryptocurrency assets held on the Deceptive
FTX Platform were safe and were not being invested in unregistered securities.
178. The FTX Entities entered into one or more agreements with Defendants with the
purpose of making these misrepresentations and/or omissions to induce Plaintiff and consumers to
invest in the YBAs and/or use the Deceptive FTX Platform.
179. Defendants engaged in unlawful acts with the FTX Entities, namely, the
misrepresentations and omissions made to Plaintiffs and the Classes and the sale of unregistered
securities.
180. Defendants’ conspiracy substantially assisted or encouraged the wrongdoing
conducted by the FTX Entities; further, Defendants had knowledge of such fraud and/or
wrongdoing, because of their experience and relationship with the FTX Entities, as described above
and as such, knew that the representations made to Plaintiffs were deceitful and fraudulent.
181. Defendants’ conspiracy with the FTX Entities to commit fraud caused damages to
Plaintiffs and the Classes in the amount of their lost investments.
48
COUNT FOUR
Declaratory Judgment
(Declaratory Judgment Act, Florida Statutes §§ 86.011 et seq .)
182. Plaintiffs reallege and incorporate by reference the allegations contained in paragraphs
1–157 as if fully set forth herein.
183. This Count is asserted against Defendants under Florida Statutes §§ 86.011, et seq.
184. There is a bona fide, actual, present and practical need for the declaratory relief
requested herein; the declaratory relief prayed for herein deal with a present, ascertained or
ascertainable state of facts and a present controversy as to a state of facts; contractual and statutory
duties and rights that are dependent upon the facts and the law applicable to the facts; the parties
have an actual, present, adverse and antagonistic interest in the subject matter; and the antagonistic
and adverse interests are all before the Court by proper process for final resolution.
185. Plaintiffs and the members of the Classes have an obvious and significant interest in
this lawsuit.
186. Plaintiffs and members of the Classes purchased YBAs, based in part on justifiable
reliance on the Defendants’ misrepresentations and omissions regarding the Deceptive FTX Platform
as further described hereinabove.
187. If the true facts had been known, including but not limited to that the YBAs are
unregistered securities, the Deceptive FTX Platform does not work as represented, and Defendants
were paid exorbitant sums of money to peddle Voyager to the nation, Plaintiffs and the Classes would
not have purchased YBAs in the first place.
188. Thus, there is a justiciable controversy over whether the YBAs were sold illegally, and
whether the Defendants illegally solicited their purchases from Plaintiff and the Class.
189. Plaintiff and the Class seek an order declaring that the YBAs were securities required
to be registered with the SEC and state regulatory authorities, that the Deceptive FTX Platform did
not work as represented, and Defendants were paid exorbitant sums of money to peddle FTX to the
nation.
49
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs pray for a judgment on behalf of themselves and the Classes:
a. Certifying the Class as requested herein;
b. Awarding actual, direct and compensatory damages;
c. Awarding restitution and disgorgement of revenues if warranted;
d. Awarding declaratory relief as permitted by law or equity, including declaring the
Defendants’ practices as set forth herein to be unlawful;
e. Awarding injunctive relief as permitted by law or equity, including enjoining the
Defendants from continuing those unlawful practices as set forth herein, and directing
the Defendants to identify, with Court supervision, victims of their conduct and
pay them all money they are required to pay;
f. Awarding statutory and multiple damages, as appropriate;
g. Awarding attorneys’ fees and costs; and
h. Providing such further relief as may be just and proper.
DEMAND FOR JURY TRIAL
Plaintiffs hereby demand a jury trial as to all claims so triable.
50
Dated: December 7, 2022 Respectfully submitted,
By: /s/ Adam Moskowitz

Adam M. Moskowitz
Florida Bar No. 984280
[email protected]
Joseph M. Kaye
[email protected]
THE MOSKOWITZ LAW FIRM, PLLC
2 Alhambra Plaza, Suite 601
Coral Gables, FL 33134
Telephone: (305) 740-1423
By: /s/ David Boies

David Boies
(Pro Hac Vice Application Forthcoming)
Alex Boies
(Pro Hac Vice Application Forthcoming)
BOIES SCHILLER FLEXNER LLP
333 Main Street
Armonk, NY 10504
Phone: (914) 749–8200
[email protected]
By: /s/ Stephen Neal Zack

Stephen Neal Zack
Hon. Ursula Ungaro (Ret.)
BOIES SCHILLER FLEXNER LLP
100 SE 2nd St., Suite 2800
Miami, FL 33131
Office: 305-539-8400
[email protected]
[email protected]
Co-Counsel for Plaintiff and the Class
51

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Case 1:22-cv-23983-BB Document 1 Entered on FLSD Docket 12/07/2022 Page 1 of 51

UNITED STATES DISTRICT COURT

GREGG PODALSKY, et al., on behalf of

Plaintiff, CLASS ACTION COMPLAINT

SAM BANKMAN-FRIED, et al.,

CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL

– Mark Cuban, Nov. 12, 2022

– Defendant Sam Bankman Fried (Former CEO, FTX)

108. According to a recent Reuters report, however, another explanation contributing to

FTX does not onboard or provide services to corporate accounts of

vii. Defendant Shaquille O’Neal

viii. Defendant Trevor Lawrence

ix. Defendant Shohei Ohtani

x. Defendant Naomi Osaka

By: /s/ Adam Moskowitz

By: /s/ David Boies

By: /s/ Stephen Neal Zack

Co-Counsel for Plaintiff and the Class

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