Celebrity endorsements in the crypto world have faced a reckoning as startups collapse and legal troubles emerge. The bankruptcy of FTX, a crypto exchange endorsed by football legend Tom Brady and his former wife, supermodel Gisele Bündchen. Both celebrities were paid in FTX stock as part of their endorsement agreements. They have also been sued by FTX customers seeking compensation.
In December, the lawyer Adam Moskowitz and the law firm Boies Schiller Flexner filed a lawsuit in Florida, accusing Brady and Bündchen of misleading investors. Among the other defendants are the comedian Larry David, the N.B.A. star Steph Curry and the tennis player Naomi Osaka, all of whom endorsed FTX.
This situation reflects the challenges faced by actors, athletes, and other celebrities who enthusiastically embraced cryptocurrencies during the boom times. Celebrities like Kim Kardashian, Lindsay Lohan, and Shaquille O’Neal have faced legal repercussions for their involvement in endorsing digital assets. In March, the S.E.C. charged the actress Lindsay Lohan, the online influencer Jake Paul and musicians including Soulja Boy and Lil Yachty with illegally promoting crypto assets.
FTX aggressively sought celebrity endorsements, and Brady’s involvement was highly sought after. He and Bündchen signed an endorsement deal with FTX and appeared in a $20 million advertising campaign for the exchange. However, when FTX collapsed, their shares and other crypto assets disappeared, leaving them empty-handed. Brady has not publicly commented on FTX or his relationship with its founder, Sam Bankman-Fried (SBF). Bündchen expressed feeling blindsided by the situation.
Brady’s other crypto venture, Autograph, has also faced challenges. The company’s revenue declined during the crypto downturn, leading to layoffs and a shift in strategy. Autograph now focuses more on helping celebrities foster loyalty with their fans rather than marketing crypto tokens. The company has also downplayed crypto-related terms in its marketing.
Other celebrities narrowly avoided being entangled in the crypto mess. Katy Perry and Taylor Swift were discussing partnerships with FTX, but these deals did not materialize. Swift’s team signed a sponsorship agreement with FTX after months of negotiations, but SBF pulled out at the last minute, leaving her team disappointed.
The downfall of FTX and the legal troubles surrounding celebrity endorsements highlight the risks and uncertainties in the crypto industry. Celebrities are finding themselves facing lawsuits and reputational damage due to their involvement in promoting digital assets. The episode serves as a cautionary tale for both celebrities and investors in the volatile world of cryptocurrencies.
