A former FTX insider joins the class action lawsuit against celebs like Tom Brady and Shaq who touted crypto (2024)

Dan Friedberg, the former chief compliance officer of bankrupt crypto exchange FTX, is cooperating with the plaintiffs bringing a class action suit versus a group of sports stars and entertainers, Fortune has learned from a new legal filing. The lawsuit’s targets include, among others, Shaquille O’Neal, Tom Brady, Naomi Osaka, and Larry David.

Friedberg’s role in assisting the plaintiffs was disclosed in an amended complaint in the case, filed late in the afternoon of May 11 in Federal Court in the Southern District of Florida. The complaint alleges that important promotional activity originated from Florida, which could be an important issue in the case. That evidence could be especially relevant on the pending jurisdictional issues.

The filing is full of fascinating details about how Friedberg first met FTX’s Sam Bankman-Fried, and eventually turned on the founder:

In the declaration, Friedberg explains that he was introduced to Sam Bankman-Fried by his father, Sam Bankman, a tax law professor at Stanford Law School. He represented SBF as outside counsel after the founder left Jane Street to start FTX in 2017. When SBF launched FTX.US in 2020, Friedberg joined full time as chief compliance officer. In that role, he oversaw a dozen attorneys and supervised three general counsels working respectively for FTX International, FTX.US, and the captive hedge fund, Alameda. Friedberg stated that on Nov. 9, 2022, he received a call from the GC of FTX International saying that FTX faced an $8 billion deficit. Friedberg claims he’d believed that clients funds “were backed one to one” and was totally blindsided. He says that he resigned the next day because “I no longer trusted Sam, Gary [Wang], and Nishad [Singh].”

It was previously reported that Friedberg is aiding the Justice Department’s case against Bankman-Fried, and no question this is a big win for the lawyers trying to prove wrongdoing on the part of the celeb endorsers. For their part, the firms representing the defendants including Latham & Watkins and Colson Hicks Eidson of Coral Gables, Fla., have maintained that the suit should be dismissed because their clients made only generally favorable comments about FTX in their advertisem*nts, didn’t mention the accounts that the plaintiffs claim are unregistered securities, and some also say the suit has no “personal jurisdiction” over the non-resident defendants.

As for Friedberg, the plan is for the “class” to drop all claims against him in exchange for his cooperation. We’ll see how this all plays out in court. But in the meantime, don’t expect to see any celebrities touting crypto anytime soon.

You can read the full story on Friedberg here.

Have a great weekend,

Shawn Tully
Email:shawn.tully@fortune.com
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VENTURE DEALS

- AccelerComm, a Southampton, U.K.-based 5G radio access network performance optimization company, raised £21.5 million ($26.92 million) in Series B funding. Parkwalk, Swisscom, Hostplus, Bloc Ventures, IP Group, and IQ Capital invested in the round.

- Cable, a London- and San Francisco-based financial crime and compliance platform, raised $11 million in Series A funding. Stage 2 Capital and Jump Capital co-led the round and were joined by CRV.

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- Micron Biomedical, an Atlanta-based dissolvable drug and vaccine administration technology company, raised an additional $3 million in funding from J2 Ventures.

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PRIVATE EQUITY

- FTV Capital and Bregal Sagemount acquired a minority stake in Neptune Flood Incorporated, a St. Petersburg, Fla.-based private flood insurance provider. Financial terms were not disclosed.

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OTHER

- Solo Brand acquired TerraFlame, a Laguna Niguel, Calif.-based fireplaces and fuels company. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

- NYBC Ventures, the New York-based venture arm of the New York Blood Center, allocated $50 million for a fund focused on blood-related fields and cellular therapies investments.