When cryptocurrency exchange FTX imploded last fall, Tom Brady, the seven-time Super Bowl-winning quarterback, made an urgent phone call.
He called Sina Nader, FTX’s director of partnerships. The exchange’s staff were in the middle of a crisis meeting with its embattled founder, Sam Bankman-Fried. Mr. Nader was unable to respond. “I never would have expected to turn down a call from Tom Brady,” he said.
Brady had reason to be concerned. As an “ambassador” for FTX, he had appeared at the company’s conference in the Bahamas and on television shows. commercial who promoted the exchange as “the most reliable” institution in the loosely regulated world of cryptocurrencies.
His money was also at stake. as part of a approval In a deal Brady signed in 2021, FTX had paid him $30 million, a deal that consisted almost entirely of FTX stock, three people with knowledge of the contract said. Brady’s wife at the time, supermodel Gisele Bündchen, was paid $18 million in FTX stock, one of the people said.
Now FTX is bankrupt and Mr. Bankman-Fried is facing criminal fraud charges. Mr. Brady, 45, and Ms. Bündchen, 42, were sued by a group of FTX clients seeking compensation from the celebrities who backed the exchange. On top of it all, the terms of the deal would have required the former couple, who divorced last year, to pay taxes on at least some of their now-worthless FTX shares, two people familiar with the endorsement deal said.
Their situation is the most high-profile example of a humiliating reckoning faced by actors, athletes and other celebrities who have been quick to embrace the easy money and online hype of cryptocurrency. During boom times, Paris Hilton, Snoop Dogg, Reese Witherspoon, and Matt Damon got excited about or invested in crypto projects, drawing a mainstream audience into the volatile world of digital currencies. It was fun and lucrative, while the prices skyrocketed.
But last year’s crash put an end to the celebrity crypto bonanza.
In October, the Securities and Exchange Commission ordered Kim Kardashian to pay $1.26 million for failing to make proper disclosures when she endorsed the EthereumMax crypto token. In December, a California attorney sued two cryptocurrency firms, MoonPay and Yuga Labs, accusing them of using a “broad network of A-list musicians, athletes, and celebrity clients” to mislead investors about digital assets.
In March, the SEC charged actress Lindsay Lohan, online influencer Jake Paul, and musicians including Soulja Boy and Lil Yachty with illegally promoting crypto assets. And at the end of May, after months of failed attempts, a process server delivered court documents Shaquille O’Neal, the retired basketball star, who was sued for promoting FTX, according to legal documents. Mr. O’Neal received a notification while broadcasting from a National Basketball Association playoff game.
Representatives for Brady, Bankman-Fried and MoonPay declined to comment. A Yuga Labs spokeswoman said the company had “never paid a celebrity to join the club.” Representatives for Ms. Bündchen and Mr. O’Neal did not respond to requests for comment.
Tech startups and celebrities have had a symbiotic relationship for a long time. Startups offer stars a way to earn money while staying at the forefront of internet culture; celebrities help young companies gain credibility and reach a larger audience.
Of all the startups that recruited celebrities to endorse cryptocurrency, FTX was perhaps the most eager. As Bankman-Fried tried to make FTX a household name, he made a list of celebrities he could imagine promoting the company, recalled Nader, a former FTX executive. Mr. Brady’s name was at the top.
A former college football player, Mr. Nader was in charge of recruiting Mr. Brady and other stars. In June 2021, Mr. Brady and Ms. Bündchen agreed a deal with Mr. Bankman-Fried, praising the “revolutionary FTX team”. Brady seemed genuinely interested in cryptocurrency, Nader said, and occasionally had conversations with Bankman-Fried.
“Imagine a tiger and a lion talking,” Nader said. “They are slightly different, they do different things, but they are really formidable in their own fields.”
In 2021, Mr. Brady also co-founded Autograph, which helps famous people sell the cryptographic collectibles known as non-fungible tokens, or NFTs. Autograph raised over $200 million from investors and Mr. Bankman-Fried joined the board.
That same year, Mr. Brady and Mrs. Bündchen strewn with stars in a $20 million ad campaign for FTX, featuring commercials that aired during NFL games. Mr. Brady also posted Tik Tok Videos with Mr. Bankman-Fried from FTX’s headquarters in the Bahamas, where he spoke at a conference in front of hundreds of people. Backstage, Mr. Bankman-Fried commented that he could imagine buying a football team one day with Mr. Brady. Ms. Bündchen also appeared at the conference as FTX’s director of environmental and social initiatives.
When FTX collapsed last November, the company’s $32 billion valuation, including the $48 million shares of Brady and Bündchen, plummeted to zero. The pair had also received a small number of Ethereum, Bitcoin and Solana tokens to trade on the platform, said one of the people, who disappeared in the FTX bankruptcy.
Brady has not publicly commented on FTX or its relationship with Bankman-Fried. After the FTX crisis meeting in November, Mr. Nader called him back.
“I was worried,” Nader said. “The first thing he asked me was, ‘Sina, how are you? I know you put your heart and soul into this.’”
Mrs. Bündchen said in March interview with Vanity Fair that she had “trusted the hype” and felt “shocked”.
Mr. Brady’s other crypto company has also been in trouble. Autograph’s revenue plunged last year amid the cryptocurrency crash, a person familiar with his finances said. The startup has changed its strategy to focus more on helping celebrities find ways to build loyalty with their fans, and less on marketing crypto tokens to consumers, the person said. The firm also removed some crypto language from its marketing, downplaying terms like NFT, another person with knowledge of the company said.
Autograph has also laid off more than 50 employees in layoff rounds, a third person said. The reductions were previously reported by Well-informed person. An Autograph spokeswoman declined to comment.
Mr. Brady has also faced legal problems. In December, Adam Moskowitz and the Boies Schiller Flexner law firm filed a lawsuit in federal court in Florida accusing him and Ms. Bündchen of misleading investors. Among the other defendants are comedian Larry David, NBA star Steph Curry and tennis player Naomi Osaka, who all endorsed FTX.
“None of these defendants performed any due diligence before marketing these FTX products to the public,” the lawsuit states.
Some celebrities narrowly escaped the crypto mess. Katy Perry, the pop star, held talks about a partnership with FTX that never came to fruition, three people familiar with the situation said.
In the spring of last year, Taylor Swift discussed a settlement with FTX that could have paid up to $100 million, two people familiar with the matter said. A tour sponsorship was on the table after Swift turned down other promotional options, a person with knowledge of the talks said. The size of the deal was previously reported by The financial times.
Mr. Moskowitz, the lawyer who sued the celebrities, said in a podcast in April that Ms. Swift had conducted due diligence on FTX, asking the exchange to prove that its cryptocurrencies were not unregistered securities. your comments generated a flurry of headlines about the business acumen of Ms. Swift. But in an interview with The New York Times, Moskowitz said he did not have inside information about the talks.
In reality, Ms Swift’s side signed the endorsement deal with FTX after more than six months of discussions, three people with knowledge of the deal said, and it was Mr Bankman-Fried who pulled out. The last-minute reversal left Swift’s team frustrated and disappointed, two of the people said.
A spokeswoman for Ms Swift declined to comment.