Golden State Warriors Sued for Peddling FTX Crypto Platform

Aron Solomon

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What a month for those who are wary that cryptocurrency might be one massive scam and legal black hole.

Unless you’re into the crypto scene, you’ve probably only heard of FTX because of its celebrity endorsers. It was a pretty A-level list of people, from Gisele Bündchen and Tom Brady, to Steph Curry, Naomi Osaka and the like.

San Bankman-Fried, son of a Stanford law professor and a law professor who is also a highly-regarded political fundraiser, saw his net worth plummet this month to zero from a peak of $26,5 billion, as per Forbes.

Known by many as simply SBF, Bankman-Fried put FTX into bankruptcy, driven by up to $2 billion of missing client funds, in what appeared to some to be the work of company insiders. Bankman-Fried also secretly transferred $10 billion of customer funds from FTX to his trading company Alameda Research. CNN also noted that FTX legal and finance teams also learned that Bankman-Fried implemented what the two people described as a “backdoor” in FTX’s book-keeping system, which was built using bespoke software.

Yes, a blockbuster book will come out on all of this, And there will be a huge movie, probably starring Jonah Hill who bears more than a passing resemblance to SBF. What remains to be seen is what assets will remain to be seized and, ultimately, whether the legal process will determine that Sam Bankman-Fried was indeed Sam Bankman-Fraud and put him behind bars.

John Lawlor, a Florida lawyer, remarked that:

“Whenever we see these massive breaches of trust by people and institutions that handle our assets, it’s destructive to the financial system. It’s left to the legal system to clean up the pieces created by these bad actors.”

So why is this important to you?

Because it’s yet another massive violation of trust in the financial industry, this one is capable of rocking the entire foundation of cryptocurrency.

How and when the legal process really kicks in may also determine the future of cryptocurrency. An excellent piece in the Atlantic argued that Bankman-Fried may have permanently altered the crypto horizon by showing how few real safeguards exist to bring long-term stability to the industry. It makes sense that how quickly and well authorities ultimately deal with SBF and the FTX collapse will shape the future of crypto.

On Monday, things got even more interesting with a lawsuit filed against the NBA’s Golden State Warriors, who made FTX their “official” crypto platform before the FTX implosion. As Reuters reported, The suit, which is simply a proposed class action at this point, was filed by a Canadian citizen residing in Hong Kong. Elliott Lam, who names Bankman-Fried and head of Alameda Research (SBF’s trading firm and FTX’s sister company), Caroline Ellison as defendants, along with the Warriors and others.

Lam’s claim is simple - that people such as him detrimentally relied upon the Warriors’ seal of approval of FTX when the team made the company their official crypto trading platform. It’s a class action because Lam rightfully argues that potentially millions of other people are similarly situated.

This won’t be the last FTX lawsuit, not the only one against Sam Bankman-Fried, who has become meme-worthy in so many ways this month, not the least of which was Monday’s viral video of SBF, well, trying to run

About Aron Solomon

A Pulitzer Prize-nominated writer, Aron Solomon, JD, is the Chief Legal Analyst for Esquire Digital and 24-7 Abogados. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world. Aron has been featured in Forbes, CBS News, CNBC, USA Today, ESPN, TechCrunch, The Hill, BuzzFeed, Fortune, Venture Beat, The Independent, Fortune China, Yahoo!, ABA Journal, Law.com, The Boston Globe, NewsBreak, and many other leading publications. .

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Aron Solomon, JD, is the Chief Legal Analyst for Esquire Digital, who has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world.

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