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FTX and Bankman-Fried sued in $11 billion consumer class action

FTX and Bankman-Fried sued in $11 billion consumer class action

Investors have formally sued troubled FTX cryptocurrency exchange alongside former CEO Sam Bankman-Fried, for losses incurred by ‘unsophisticated investors’. 

The consumer class action lawsuit worth $11 billion has been filed before a Florida court over alleged violation of yield-bearing crypto accounts associated with the exchange, Reuters reported on November 16. 

Furthermore, the lawsuit has named celebrities associated with promoting FTX, including National Basketball Association (NBA) stars Stephen Curry and Shaquille O’Neal, alongside American football’s Tom Brady. NBA outfit, the Golden State Warriors, has also been named. 

“FTX’s fraudulent scheme was designed to take advantage of unsophisticated investors from across the country, who utilize mobile apps to make their investments. <…> As a result, American consumers collectively sustained over $11 billion dollars in damages,” Oklahoma resident Edwin Garrison said in the suit. 

Bankman-Fried possible extradition 

The lawsuit comes amid increasing reports over the possible extradition of Bankman-Fried from the Bahamas to the U.S. to face interrogations over his role in the FTX collapse.

At the same time, previous reports indicated that venture capitalists (VCs) associated with the exchange are considering suing Bankman-Fried over alleged fraud for misappropriating customer funds. 

Despite impacting the price of most cryptocurrencies, FTX collapse is also expected to plunge other associated firms into bankruptcy. 

Additionally, FTX’s legal woes could be mounting after it emerged that the Rosen Law Firm, a global investor rights law firm, was investigating possible securities claims on behalf of investors who purchased the exchange’s native token, FTT. According to the law firm, FTT investors may be entitled to compensation. 

Notably, after the FTX liquidity crunch unraveled, the FTT token corrected significantly, at some point plunging by as much as 80%. 

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