Lawsuit against FTX celebrity promoters gets backup from former exec

May 12, 2023 Coin Telegraph

Brady

Daniel Friedberg, the former top compliance chief for FTX and FTX US, has provided a declaration that could support the lawsuit.

A class action lawsuit against celebrities who allegedly promoted the now-bankrupt FTX has scored the cooperation of a former exchange executive — ex-compliance chief Daniel Friedberg.

A May 11 proposed amended complaint filed in a Florida District Court from the class action lawyers said Daniel Friedberg provided evidence that promotional activity for FTX originated from Florida.

Friedberg was the chief regulatory officer at FTX and the chief compliance officer of FTX US, the exchange's United States arm.

The declaration could potentially rebut a key defense made by some of the defendants who claimed the Miami court has no jurisdiction and the claims have no association with Florida.

In sworn testimony, Friedberg said FTX US’ vice president of business development, Avinash “Avi” Dabir was based in Miami and was in charge of brand ambassadors for FTX, including defendants in the case — which include former basketball player Shaquille O’Neal, comedian Larry David, retired NFL player Tom Brady and FTX founder Sam Bankman-Fried.

We couldn't keep it secret any longer! We're partnering with...the one...the only...@SHAQ! (a.k.a. Shaqtoshi) pic.twitter.com/V37UQ5wsXI
— FTX (@FTX_Official) June 1, 2022

He said Dabir operated from an FTX office in Miami “early in 2021.” The class action lawyers said this refutes the arguments made by the defendants in their motions to dismiss.

Some of the alleged promoters claimed that “no conspiracy could have been ‘engineered in Florida’ because FTX did not even plan to move to Miami until late September 2022” which was before they entered into the alleged promotional agreements.

The class action lawyers are using the new evidence to amend their lawsuit to try to address the jurisdictional claims by the suit's defendants.

The court will decide if the evidence is sufficient.

The suit was first filed in mid-November shortly after the collapse of the exchange. Other alleged celebrity promoters include Brady’s then-wife and model Gisele Bündchen, entrepreneur Kevin O’Leary, and basketball star Steph Curry along with his team the Golden State Warriors.

We’re proud to announce Tom Brady will serve as an FTX Ambassador, and Gisele as FTX’s Environmental & Social Initiatives Advisor.

“We have the chance to create something really special here.” says the Super Bowl Champion and entrepreneur @TomBrady https://t.co/yDLC1Q1KFG
— FTX (@FTX_Official) June 29, 2021

Friedberg was also named as a defendant in an amended complaint on Dec. 16.

The former compliance head has reportedly lent a hand to other legal proceedings against the exchange he used to work for.

Investigators with the New York District Attorney, the Justice Department, the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) purportedly got details about FTX from Friedberg a few weeks after the exchange collapsed.

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Coinbase faces suit over alleged privacy violations in biometrics collection

May 2, 2023 Coin Telegraph

biometric data

The proposed class action lawsuit alleges the exchange violated privacy laws in Illinois when it collected and stored users' fingerprints and facial scans.

Coinbase violated biometric privacy laws in Illinois through its collection and storage of customer fingerprints and facial templates, a proposed class-action lawsuit alleges.

A May 1 filing in a California District Court by a Coinbase user claimed the exchange's requirement that a customer uploads pictures of a valid ID and a self-portrait in order for the firm to conduct Know Your Customer (KYC) checks is violating certain provisions of Illinois’ Biometric Information Privacy Act (BIPA).

The lawsuit argues BIPA required Coinbase to gain permission from users when collecting their biometrics. Coinbase needed to also provide the purpose for collecting such data, how long it would be stored, how it would be used and how Coinbase would permanently destroy it.

“Coinbase had no written policy, made available to the public, establishing a retention schedule and guidelines for permanently destroying biometric information,” the suit argued.

*Coinbase user Michael Massel filed the suit on May 1, demanding a jury trial. Source:* *CourtListener*

In a similar process used by other exchanges, the suit says Coinbase scans the photographs and creates a biometric template of a user’s face. It uses the information to confirm a match between the self-portrait and the face on the supplied ID.

“Thousands” of “highly detailed geometric maps of the face” and fingerprints from Illinois residents are claimed to have been illegally collected and stored by the exchange.

Biometric authentication, such as a fingerprint or face scan, is also used on Coinbase’s mobile app to verify the user when logging into their account, the suit states.

It was alleged Coinbase’s “collection, obtainment, storage, and use” of such data is “unlawful” and exposes users “to serious and irreversible privacy risks.”

“If Coinbase’s database containing facial geometry scans or other sensitive, proprietary biometric data is hacked, breached, or otherwise exposed, Coinbase users have no means by which to prevent identity theft.”

The filing asserted that Coinbase should have “permanently destroyed” biometric data after a user opened a Coinbase account, as such information was used for the sole purpose of opening the account.

The suit is seeking damages of $5,000 per intentional BIPA violation or $1,000 if the court finds the alleged violations were not wilful along with paying the attorneys fees and court costs of the class action.

Cointelegraph contacted Coinbase for comment but did not receive a response by publication.

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Appellate court decision allows Bitconnect class action to proceed

February 23, 2022 Coin Telegraph

BitConnect

The superior court has reversed a lower court’s decision, making it possible for a class action to proceed against the promoters of one of crypto’s most infamous scams.

The 11th Circuit Court of Appeals has ruled that victims of the Bitconnect Ponzi scheme can proceed with a class action suit by reversing a previous ruling that prohibited such a case.

Bitconnect is the endlessly memed ICO from 2017 that collapsed in January, 2018. Appellate courts are superior courts that are used to review previously tried cases so the ruling may be reversed or confirmed.

The alleged victims may now move forward with a class action case against BitConnect (BCC) and its promoters Glenn Arcaro, Ryan Maasen, Trevon James, Ryan HiIdreth, and Craig Grant. There is no word yet on whether the complainants will proceed with the case.

The original complainants filed suit in order to be compensated for damages from being defrauded by BitConnect and its promoters. The complaint says promoters “made a mockery of state and federal securities laws.”

Law360 wrote on Feb. 22 that the defendants claimed in the Southern District of Florida that since marketing for the project was done using online mass communications platforms, they could not be held liable for securities fraud.

The defendants successfully argued that there could “only be liability when a seller directs solicitations to particular prospective buyers.” By using online social media platforms, the promoters argued that they had not directly solicited the cryptocurrency to buyers. Without that direct solicitation, they argued there was no securities fraud.

However, the Circuit Court decided to reverse the lower court’s decision to accept that argument since there is no precedent of the Securities Act of 1933 preventing online videos from being used in fraud charges.

Judge Britt C. Grant wrote for the court’s panel on Feb. 18:

"Because the Securities Act provides no free pass for online solicitations, we reverse the district court's dismissal of the section 12 claim.”

The Circuit Court’s panel called the lower court’s reading of the Securities Act “cramped” and said that it “makes little sense” as it would have held a person liable for soliciting a security in a personal letter, but not an internet video.

David Silver, an attorney in the original case against BitConnect and its promoters tweeted on Feb. 19 “This is an incredibly important decision that will reverberate for years to come.”

This new precedent adds greater legal risks and responsibilities for crypto promoters who use YouTube, Twitter, and other online communications platforms to shill crypto. Judge Grant wrote, "A new means of solicitation is not any less of a solicitation."

In recent years, YouTube has removed videos and shut down channels related to cryptocurrency it deems “harmful and dangerous.”

11th Circuit Court of Appeals reverses trial court decision in Bitconnect case and holds that peddling shitcoins in a non-targeted way on the interwebs (YouTube, Twitter etc) exposes promoters to liability from purchasers of unregistered securities. pic.twitter.com/Oh7BA4GGo2
— Palley (@stephendpalley) February 18, 2022

The Securities and Exchange Commission (SEC) filed suit against the founders and promoters last May, and received $12.6 million in cash and BTC through a settlement deal in August.

Last November, the Department of Justice (DOJ) said it planned to sell crypto it had seized from BitConnect valued at $56 million as potential compensatory payment for victims in future cases.

Class Action Suit