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The Almighty Buck Advertising The Media

FTX's Celebrity Endorser Tom Brady Faces Worthless Stock, Lawsuits (yahoo.com) 83

Posted by EditorDavid from the no-gain dept.
As an "ambassador" for FTX, football quarterback Tom Brady appeared at the company's conference in the Bahamas, and in TV commercials promoting the exchange as "the most trusted" institution in crypto, remembers the New York Times. And it was all about to go very bad...

"His money was also at stake. As part of an endorsement agreement 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 Bankman-Fried is facing criminal fraud charges. Brady, 45, and Bündchen, 42, have been sued by a group of FTX customers seeking compensation from the celebrities who endorsed 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 stock, two people familiar with the endorsement deal said. Their situation is the highest-profile example of a humiliating reckoning facing the actors, athletes, and other celebrities who rushed to embrace the easy money and online hype of cryptocurrencies...

But last year's crash ended the celebrity crypto bonanza. In October, the Securities and Exchange Commission ordered Kim Kardashian to pay $1.26 million for failing to make adequate disclosures when she endorsed the EthereumMax crypto token. In December, a lawyer in California sued two crypto companies, MoonPay and Yuga Labs, accusing them of using a "vast network of A-list musicians, athletes and celebrity clients" to mislead investors about 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. And in late May, after months of failed attempts, a process server delivered court papers to Shaquille O'Neal, the retired basketball star, who was sued for promoting FTX, according to legal filings. Mr. O'Neal was served while broadcasting from a National Basketball Association playoff game...

Brady has also faced legal trouble. In December, Adam Moskowitz and the law firm Boies Schiller Flexner filed a lawsuit in federal court in Florida accusing him and Bündchen of misleading investors. Among the other defendants are comedian Larry David, NBA star Steph Curry and tennis player Naomi Osaka, all of whom endorsed FTX. "None of these defendants performed any due diligence prior to marketing these FTX products to the public," the lawsuit said.
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FTX's Celebrity Endorser Tom Brady Faces Worthless Stock, Lawsuits More

FTX's Celebrity Endorser Tom Brady Faces Worthless Stock, Lawsuits

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  • woe is him. (Score:4, Insightful)

    by Anonymous Coward on Monday July 10, 2023 @07:08AM (#63673197)
    yeah I am sure he is borderline destitute with barely a quarter of a billion dollars after such a loss. mixed feelings here, he deserves to lose a lot more, but might give him the benefit of just being a gullible moron.

  • Oh noes! (Score:5, Insightful)

    by LatencyKills ( 1213908 ) on Monday July 10, 2023 @07:12AM (#63673203)

    Kim Kardashian had to pay $1.26M. Her net worth is $1.9B with a B. She probably has $1.26M littered amongst the cushions in her couch. I'm not even sure this rises to the level of minor inconvenience in her life - she has lawyers that handle this kind of thing, along with the people who sue her when her perfume makes them break out in hives, and I suspect never has to show her face in court or even for a deposition.
    Tom Brady/Giselle Bundchen are both insanely wealthy as well. $30M is real money to them - they are worth a piddly $700M jointly - but it will in no way change a whit in how they live.
    None of this is really a penalty in the scheme of any of their lives.
    Side note: Larry David's commercial specifically (and IMO kind of hilariously) showed him being unenthusiastic about crypto. It was a gag, but I'm not sure even as satire that I see the commercial being about him endorsing crypto.

    • I find your lack of religious devotion disturbing. (Score:4, Funny)

      by denzacar ( 181829 ) on Monday July 10, 2023 @07:38AM (#63673253) Journal

      Those poor celebrities suffered and continue to suffer for our sins.

      You better repent by buying a golden dildo [goop.com] at the Goop store or the baby Jesus will smite you.

    • even as satire that I see the commercial being about him endorsing crypto.

      Yeah, pretty much.

    • Is that $1.9B in Elon Musk Monopoly Money or $1.9B in cold hard cash?

    • Brady and Bündchen basically lost everything they made from the deal, plus whatever they’ll have to pay because of the lawsuits. Then there’s the taxes. So I’d say they got hit hard, whatever other wealth they may have.

      By the way, do you have to do due diligence before signing on to do advertisements? I’ve heard of companies and advertising agencies being punished for fraudulent advertising, but never the actors who appeared in the commercials, whether they were celebrities

      • By the way, do you have to do due diligence before signing on to do advertisements? I’ve heard of companies and advertising agencies being punished for fraudulent advertising, but never the actors who appeared in the commercials,

        Interesting question. Did anyone who appeared in a cigarette commercial ever get sued? Not that I'm aware of.

        Personally, I would hope the law recognizes a paid actor is just reading lines. But when they start using their name and celebrity, well, good question.

        • Everything I understand is that as long as the paid endorsement is disclosed, it does not matter that a celebrity lends their name to a product in terms of legal obligations. Moral responsibility is another matter. But as with all things legal, do not take my world and consult a lawyer.

        • This is a discussion I had with my wife the other day. She saw a Kia ad once with LeBron James in it, and she swears that he drives a Kia.

          Reality would say that there's no fucking way that guy is driving down to Staples Center in anything less expensive than a fully-optioned Range Rover, and probably has a Bentley or a Mercedes G-Wagon to roll in if he's feeling special that night.

          Even if he owns a Kia because he was given one as part of his compensation when he filmed the ad and was contractually obligate

        • Interesting question. Did anyone who appeared in a cigarette commercial ever get sued? Not that I'm aware of.

          I think one of the old "Marlboro Man" actors died of smoking related diseases. That's almost as good.

          • Lung cancer, IIRC. The irony-o-meter is pegged.

            I recently stumbled over some ads from the 50's or 60's where people in white lab coats explained how soothing brand X was on the throat and how it was doctor's preferred brand. They're pretty astounding seen from today's eyes.

            On the other hand, I remember seeing a billboard a decade or two ago. Same iconic western landscapes, same cowboys. Caption was "Jim, I sure miss my lung."

    • The Kim Kardashian case is much different. She was charged by the SEC for failing to disclose that she was paid to promote crypto. The issue was between here and the SEC and it was settled for $1.26M. If I remember, she was only paid 0.25M for the posts so the punishment is reasonably fitting.

      The current cases aren't about the government or criminal charges. They are about private investors asserting that the promotions were misleading. Sure the two are inter-related but they are also quite different

      • If you do get paid, you can disclose that or not.

        Technically, disclosure is optional. Legally, disclosure should be done to avoid problems like with the SEC, FTC, and a host of other alphabet soup regulatory bodies.

        • In some cases, disclosure is more optional than others. In the Kim Kardashian case to which the OP referred, it was an SEC violation to not disclose. In other cases, you might be legally allowed to not disclose. I am not a lawyer. The current controversy isn't about disclosure it's about truthfulness. It was clear that Brady et al got paid to endorse the security. But if you take money to make false statements about a security, the SEC will seek (potentially criminal) penalties.
  • Surely they deserve to have their investments protected by the government in case whatever they blindly endorse fails?

  • Is "due diligence" even a thing anymore? (Score:4, Insightful)

    by rocker_wannabe ( 673157 ) on Monday July 10, 2023 @07:30AM (#63673225)
    I think the existence of SPACs proves that "due diligence" is a joke now. Everything is based on personalities that are "supposed" to be trustworthy. It's hard to protect morons who think famous people can be trusted. Even a rudimentary understanding of cryptocurrency would show that they are built on hype and maybe illegal transactions. If they are going to go after celebrities for hyping cryptocurrency why doesn't the government go after them for hyping unhealthy food and cosmetic products?

    • Re:Is "due diligence" even a thing anymore? (Score:4, Insightful)

      by gtall ( 79522 ) on Monday July 10, 2023 @07:39AM (#63673255)

      "If they are going to go after celebrities for hyping cryptocurrency why doesn't the government go after them for hyping unhealthy food and cosmetic products?"

      Without some sort of law or scientifically based investigation on an unhealthy food or cosmetic, a court case would be brief and unsuccessful. And if it is a scientifically based investigation, there will be some sock-puppets put forward by Whatever Company that claims the product is not harmful. See tobacco and the petroleum companies for examples.

      • "If they are going to go after celebrities for hyping cryptocurrency why doesn't the government go after them for hyping unhealthy food and cosmetic products?"

        Without some sort of law or scientifically based investigation on an unhealthy food or cosmetic, a court case would be brief and unsuccessful. And if it is a scientifically based investigation, there will be some sock-puppets put forward by Whatever Company that claims the product is not harmful. See tobacco and the petroleum companies for examples.

        To your point, "natural" products are exempt from regulation that other food and cosmetic products are, as long as they make no health claims.

        • When I see someone advocate some product is healthier because it is "natural", I gently remind them that many poisons like hemlock are natural.

    • Even a rudimentary understanding of cryptocurrency would show that they are built on hype and maybe illegal transactions[...]

      Bah, even a rudimentary understanding of celebrities would show the same thing. About celebrities.

    • If they are going to go after celebrities for hyping cryptocurrency why doesn't the government go after them for hyping unhealthy food and cosmetic products?

      In the case of the SEC, they are only involved when these celebrities failed to disclose they were paid to endorse crypto, and yes, they go after them when they fail to disclose paid endorsements in other industries. The lawsuits mentioned are civil lawsuits from people, not the government.

  • Why do people believe celebrities? (Score:5, Insightful)

    by Opportunist ( 166417 ) on Monday July 10, 2023 @07:42AM (#63673265)

    Tom Brady knows how to throw a football. Bündchen knows how to ... beats me.

    Neither of them know fuck all about investment or blockchains.

    Why do people give a fuck about an endorsement from people who know fuck all about what they endorse? If Brady endorses some kind of ointment for bruises and other physical injuries and Bündchen does the same for ... whatever something might be that models know, I could see the value of those endorsements.

    But this?

    • Re:Why do people believe celebrities? (Score:5, Insightful)

      by Retired Chemist ( 5039029 ) on Monday July 10, 2023 @08:03AM (#63673301)
      Don't know, but they do. Name recognition is a big thing. It applies to all sorts of things. The one who shouts loudest is the one who is followed, not the one who actually knows what is going on. Plenty of people warned that this area was full of fraud, all people saw was a get rich quick scheme. The basic principle applies, if it sounds too good to be true, it is. From Ponzi, to Madoff, to FTX, the all the ones that are still on-going, there is a sucker born every moment.

    • Re: (Score:1)

      by Anonymous Coward

      WHAT!? You mean consumers have to _think_? Surely not, it's unamerican.

      The only American thing to do is to absolve yourself of all responsibility and let some lawyers duke it out on your behalf.

    • They have more money than they can spend and their reputation is valuable, so it's not unreasonable to expect them not to be peddling trash. And you can assume they have expert advisors that the average person can't access.

      • It is unreasonable to expect that, greed has no bounds. You have to be naive to believe just because someone is rich they are more honest. They probably got rich by taking advantage of people in the first place. As for advisors you mean yes men.

    • Tom Brady knows how to throw a football. Bündchen knows how to ... beats me.

      Neither of them know fuck all about investment or blockchains.

      Why do people give a fuck about an endorsement from people who know fuck all about what they endorse? If Brady endorses some kind of ointment for bruises and other physical injuries and Bündchen does the same for ... whatever something might be that models know, I could see the value of those endorsements.

      But this?

      Because they're celebrities. Who are we supposed to trust to tell us what to wear, what products to buy, where to invest and otherwise how to think? Do you think we can think for ourselves?

    • Re:Why do people believe celebrities? (Score:4, Insightful)

      by timeOday ( 582209 ) on Monday July 10, 2023 @09:43AM (#63673513)
      Celebrity endorsements actually do make some logical sense to something that will only work if everybody jumps together.

      Even if you view crypto cynically as a pyramid scheme, a celebrity endorsement provides some evidence that "the masses" will be streaming in, so there will be a "greater fool" for you to sell to. And in fact there are certainly some people who got into crypto early and got out early and made real money.

    • I think it meant a lot more back in the olden days when celebrities had a lot more social value, when people only ever saw them in the actual media or maybe a blurb in the paper now and then.

      Today there, for FTX I imagine the draw was to give FTX credibility by the fact that people deep down know these are just paid endorsements, but the fact that FTX, this new company has the ability rack up so many endorsements and pay for them means this company must be legit right? How else could they afford such lavish

      • >I think it meant a lot more back in the olden days when celebrities had a lot more social value,

        Now wait a minute.

        Celebrities are still valuable.

        They are a critical reserve supply of emergency calories and protein in the event of an apocalypse!

        hawk

    • My mind keeps going back to a local ad with a famous soccer player endorsing... an ISP.
      No, he was not also an IT expert.

    • There's a cultural assumption that none of these people's opinions are real, and they actually are promoting the views of a whole team of supposedly competent individuals. That assumption is baked into the assumption that these celebrities got so popular because they must have a team of competent people helping them get there. Nobody ever expects The Spanish Inquisition.

    • Re:Why do people believe celebrities? (Score:4, Informative)

      by m00sh ( 2538182 ) on Monday July 10, 2023 @10:41AM (#63673755)

      The psychological processes are well known: figures of authority, association, social proof, reciprocity etc. Basically a lot of things that gets someone to make emotional decisions rather than rational ones.

      Maybe football and fashion modeling aren't something you pay attention to and so these don't affect you.

    • Tom Brady knows how to throw a football. Bündchen knows how to ... beats me.

      The answer is Bündchen knows how to make money. Her estimated worth is $400M which $100M more than Brady.

      If Brady endorses some kind of ointment for bruises and other physical injuries and Bündchen does the same for ... whatever something might be that models know, I could see the value of those endorsements.

      Personally, I would skeptically view any celebrity endorsement of anything as just another ad.

      • The answer is Bündchen knows how to make money. Her estimated worth is $400M which $100M more than Brady.

        If she is a model she knows how to make money by convincing people to buy stuff, by looking pretty

        • Considering she did not work for years while raising children and is still worth more than Brady, she is probably good at keeping money.

    • Tom Brady knows how to throw a football. Bündchen knows how to ... beats me.

      Neither of them know fuck all about investment or blockchains.

      That may be true. I see no reason to believe either is a particularly trustworthy financial advisor. But on the other hand, Brady doesn't strike me as dumb and you'd hope one doesn't accumulate hundreds of millions over 20 years without learning something from your advisors. Many athletes and performers turn out to be pretty good business people (e.g. Joe Montana, Arnold Schwarzenegger, and Rhianna all run large enterprises). I wouldn't assume that just because someone is an athlete or actor they can't poss

      • Lots of people can turn out to be good business people if given enough seed money, look at Trump.

    • Tom Brady knows how to throw a football. Bündchen knows how to ... beats me.

      Neither of them know fuck all about investment or blockchains.

      Why do people give a fuck about an endorsement from people who know fuck all about what they endorse? If Brady endorses some kind of ointment for bruises and other physical injuries and Bündchen does the same for ... whatever something might be that models know, I could see the value of those endorsements.

      But this?

      Celebrity endorsements have some value:

      1) Is company X someone in their garage or a big company with a lot of money? Hiring a celebrity shows they're the big company with cash.

      2) Celebrities build their career on their reputation, and there's a reputational cost if you make a bad endorsement.

      I think the way this broke down was with #2, there used to be a big stigma against artists "selling out" by doing a commercial or something, probably a lot more than there should have been. Unfortunately that's been rep

      • Even now, I doubt many people are thinking worse of Brady for his scammy endorsement.

        More than that, he gets to hide in a crowd of other celebrities that did their own scammy crypto endorsements for various scams^H^H^H^H^H exchanges. It's not a small list.

  • Advice (Score:5, Insightful)

    by Mr D from 63 ( 3395377 ) on Monday July 10, 2023 @08:21AM (#63673321)
    Don't take financial (or political or other) advice from celebrities. Don't take any advice from them unless its in their wheelhouse. Take acting advice from actors, take training advice from sports celebrities, etc.
    • You might wonder if Brady et al. have enough money to hire a financial advisor. I guess they would first have to hire someone to tell them to hire a financial advisor.

    • Also, don't take financial advice from...financial advisers. They have a financial stake in your decision, and don't have YOUR best interests at heart.

      You've got to do your own research, unfortunately.

      • It depends - there certainly are a lot of investment mills out there that want to take a few grand off you to give you some really basic bullshit advice after running you through their particular flavor of a risk assessment, and then let you fuck off having not learned or accomplished anything.

        There are also plenty of financial advisors that pay attention to their morals and values and understand that they are being paid to render a service, and the better they do at that service, the more likely it is that

        • It's worse than just cookie-cutter advice. Many financial advisers are paid commissions by certain funds, which motivates them to steer you to the funds that pay them the highest commissions. To mitigate this risk, consider only financial planners that are accredited CFP, and from that group, specifically choose "fee-only" planners, who don't take commissions at all.

          https://www.consumerreports.or... [consumerreports.org]

    • Make sure you follow this consistently, not just depending if you agree with their politics or you're a hypocrite.

      Let's remember for example that politicians know nothing about climate, nuclear scientists know nothing about geopolitics and the use to which nuclear weapons may be put.

  • Wake me up when Tom Brady UN-retires and returns to American Football.

    • Re: (Score:2)

      by PPH ( 736903 )

      Wake ME up when Gisele Bundchen un-retires and returns to Maxim Magazine.

  • You know things are fucked up when the rich are getting grifted in full public view.

  • If someone puts their PERSONAL ENDORSEMENT on a product (you know, for piles of $) they should likewise be held PERSONALLY LIABLE for the failure of that product.

    Y'know, as if a person's word still meant something.

    • If someone puts their PERSONAL ENDORSEMENT on a product (you know, for piles of $) they should likewise be held PERSONALLY LIABLE for the failure of that product.

      Y'know, as if a person's word still meant something.

      It does. A paid endorsement...

    • Re: (Score:2)

      by Ogive17 ( 691899 )
      Well - his payment for endorsing the product is worthless so technically, he paid a bigger price than most.

      Personally, I'm sick of people making poor choices and then blaming others. That is what children do. I have a son in elementary school, it's amazing how nothing is ever is fault!

      If you lose money in FTX because Tom Brady endorsed it, maybe you're the problem. (I use "you" in a general sense, not directed at you). In investing, for every winner there must also be a loser. The winners in crypto

    • If you gave FTX a bunch of your money to invest in something you don't understand purely because a celebrity endorsement convinced you to, then you're far stupider than the FTX marketing people gave you credit for (which isn't much) and you deserve what you get.

      NOBODY should invest in ANYTHING unless they've done at least a little research, and it wouldn't have taken more than a Google search to see what the downside to crypto is in about 20 seconds, even before the FTX sublimation.

  • How stupid and ignorant can you be to take financial advice from a football player and a model, however famous they are?

  • Legal clickbait (Score:4, Insightful)

    by xanthos ( 73578 ) <xanthos@toke.PARIScom minus city> on Monday July 10, 2023 @09:17AM (#63673435)
    There is an overabundance of lawyers in the US and you can always find one willing to file a lawsuit over anything. At worst (for the lawyer) it gets thrown out at the first hearing and he is out whatever it cost him to file. Even then his name and/or the name of his firm will be forever archived on the interwebs. Free advertising forever and as the old saying goes "Any publicity is good publicity."

    • There is an overabundance of lawyers in the US and you can always find one willing to file a lawsuit over anything. At worst (for the lawyer) it gets thrown out at the first hearing and he is out whatever it cost him to file. Even then his name and/or the name of his firm will be forever archived on the interwebs. Free advertising forever and as the old saying goes "Any publicity is good publicity."

      In the case, I think it's the old "Sue whoever has money that can pay out a settlement" since FTX clearly doesn't. Depending on the deal structure, the taxes could be a nice chunk of coin they unexpectedly have to pay.

    • There is an overabundance of lawyers in the US and you can always find one willing to file a lawsuit over anything. At worst (for the lawyer) it gets thrown out at the first hearing and he is out whatever it cost him to file. Even then his name and/or the name of his firm will be forever archived on the interwebs. Free advertising forever and as the old saying goes "Any publicity is good publicity."

      Also, Boies of Boies Schiller Flexner doesn't need publicity, since he was part of US v Microsoft as well as Bush v Gore, amongst other high profile cases.

  • The stock was paid to Brady, et. al., as ordinary income. The fact that it became worthless should, in no way, shield them from paying income taxes on the original amount. It isn't like a person buying stock with their ow funds and having that stock loss value before being sold which can be declared as a loss to be credited against other investment gains.

    • Re: (Score:2)

      by m00sh ( 2538182 )

      I would assume that he didn't set up those stocks compensation as ordinary income declared on his w2 but probably has business entities set up to receive the compensation and can write off the loss as capital loss on the corporate tax return when they went to 0.

      • Re: (Score:2)

        by hawk ( 1151 )

        they would still be ordinary income to the business, which depending on type might pay taxes itself before passing the income to him, who would pay taxes.

        On reaching zero value, whoever held the stock would have a capital loss.

        For individuals, only $3k/year of capital loss can be used to offset ordinary income, but it can offset other capital gains.

        But even if he has enough gains to offset, that's still saving gas at th capital gains rate, and not the ordinary income rate, so he would still lose money.

        • that's still saving gas at th capital gains rate, and not the ordinary income rate, so he would still lose money.

          Unless it's short-term cap gains, in which case it's exactly the same as his ordinary income tax rate until the threshold is met to convert it to a long-term cap gain.

  • He's a footballer - i.e. not an IQ heavyweight, and certainly not a finance specialist.

    Idiocy is a valid defense.

  • GOAT can mean more than one thing.

  • I know it is a vain hope, but I hope more influencers are held accountable for the fallacies they spew, or at least become a little more cautious as a result of well publicized cases like this.

    • I believe (but obviously the law doesn't) that if you decide to be a spokesperson for a product or service and you're not just a hired actor more akin to a mascot but actually lending your 'reputation' to the job... yes, you deserve to be held accountable in court if you've mislead people.

      Power and responsibility in equal measure. If you have the power, you should be held responsible for how you use it.

  • Same upstanding crew that filed the SCO lawsuits.

  • That gave me bad investment advice in a TV ad....

  • Did Tom Brady listen to Matt Damon?

  • How's what he did any different than, say, an actor being paid to do a commercial?

    Is it strictly because it's a financial institution? Does that subject their advertisements to more stringent regulations?

    • Is it strictly because it's a financial institution? Does that subject their advertisements to more stringent regulations?

      The SEC is more stringent about financial disclosures as Kim Kardashian found out. If she endorsed pet food without disclosure, enforcement would fall on the FTC which may have not done anything as they have more important priorities.

    • With financial and securities you are required to disclose payments and other info to be considered an endorser; that was not done with FTX. So the lawsuit is that they were personally involved with the company not endorsers, so are libel for actions the companies action. Unlike other people involved they still have money.
      the most likely defense is going to be FTX was into crypto-currencty and that is not considered or regulated like a financial or security product so those rules do not apply.

      https://w [sec.gov]
  • They only want his poop.

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