In today’s world, if you want to sell anything – from clothes to a cookbook – you have to do little more than getting a celebrity to endorse your product. This is the way today’s marketing works, although it has the potential to be extremely damaging.
Don’t believe us? Remember the time when Kim Kardashian made a paid Instagram post on appetite-suppressant lollies, given the fact that most of her audience consists of young women?
Yes, this is the truth. However, unfortunately, for many brands, being endorsed by a celebrity means that they are finally going to make their breakthrough in the market since the fans are going to come rushing in to get the product that their favorite celebrity has approved of. This is why many of these celebrities charge millions of dollars for a single advertisement or an Instagram post talking about the product.
View this post on Instagram
However, it seems like FTX investors aren’t too happy about this situation, and they are suing the celebrity endorsers.
Tough Day To Be A Celebrity
Investors have officially filed a lawsuit against FTX- Founder Sam Bankman-Fried and a list of celebrities who have previously or are currently working to promote the cryptocurrency platform. This includes celebrities like Tom Brady, Stephen Curry, and even Larry David.
The lawsuit claimed that FTX is a Ponzi scheme and has shown fraudulent activity while managing customer funds between the affiliate entities. It accused the company and the people (celebrities) who have endorsed the company of promoting unregistered security.
View this post on Instagram
The lawsuit also goes on to claim that the model that FTX was based on is considered to be “a house of cards” and that it was bound to collapse the way it did. This is why it targeted an unsophisticated audience so that they can invest their money and FTX can use the money to pay off their previous loans and keep up with the facade of liquidity.
Celebrity Endorsements
Filed in the Florida federal court, the complaint talked about how FTX has utilized some of the biggest names in the sports industry and the entertainment industry to raise money and push American citizens to invest in their company.
Celebrities like Noami Osaka, Shaquille O’Neal, and Gisele Bundchen were featured in the advertisement. In one of the commercials, sports star Stephen Curry even implied that he has nothing to worry about when trading cryptocurrency through FTX, although Curry had denied being an expert on the topic.
View this post on Instagram
In A Downward Spiral
The company has filed for Chapter 11 bankruptcy mainly because the market has crashed, and millions of people who have invested their hard-earned money are demanding a refund. The Federal Trade Commission and the Department of Justice are already working on the ongoing investigation following the complaints filed and potential criminal activity as done by FTX.
The celebrities who have endorsed FTX are being sued based on wrongful presentation and purposefully omitted information, which they broadcast on television and through the internet.
If this lawsuit goes in favor of the investors, then it would be a lot of trouble for these celebrities.