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How Sam Bankman-Fried's FTX built a network of star backers, like Tom Brady and Larry David

Feb. 10, 2023
How Sam Bankman-Fried's FTX built a network of star backers, like Tom Brady and Larry David

Disgraced FTX founder Sam Bankman-Fried attracted his array of celebrity backers by first enticing their agents to invest in his collapsed crypto brand with deals that were previously only available to employees. 

When FTX came to global prominence it boasted comedian Larry David as well as recently retired Tom Brady and NBA superstar Steph Curry among its backers. 

Behind the scenes, the brand also counted some of the biggest talent agents and agencies as shareholders, including IMG, the talent agency owned by Hollywood super agent Ari Emmanuel and sports agent Jeff Austin, according to a new report from the Financial Times. 

The FT reports that there was minimum floor for investors but that agents were allowed to buy in to the brand for fees as low as $25,000 and $50,000.

A former employee told the newspaper, 'Sam granted people from the big agencies an opportunity to throw in like employees.' 

The Financial Times goes on to report that celebrity backers and their representatives were given access to the company's sensitive financial data in order to make them more comfortable with their investment. 

In a presentation given exclusively to A-list investors, FTX was described was the 'largest non-Chinese crypto exchange.' That presentation also promised profits of $800 million in 2021. 

These claims, made to drawn in high end investors, make up part of the extensive investigation into Sam Bankman-Fried and his cohorts being undertaken by the US Securities and Exchange Commission.

A source told the Financial Times that agents were not given 'sweetheart deals' other than being allowed to buy in for less money. 

That person was quoted as saying: 'FTX didn’t give gifts but let you in the door if you wanted to come in. It was just open for the agents to invest. They’d seen the same financials as their clients and put their own money in.'

Agent Ari Emanuel's IMG owned $2.1 million worth of shares in January 2022. Gisele Bundchen, a former IMG client owned $32 million in shares while her ex-husband Tom Brady's share was worth $32 million. 

A source told the Financial Times that the couple's team were 'extremely diligent' in going over FTX's balance sheets and were satisfied with their investment. 

 

Another former IMG client, tennis star Naomi Osaka, was a high-profile influencer for FTX. 

Seinfeld creator Larry David, who infamously appeared in one of FTX's Super Bowl commercial, is represented officiated Emmanuel's wedding in 2022. 

Five executives at sports agency Octagon, including founder Philip de Picciotto, also owned stakes in FTX. A spokesman for the company told the FT that all the investments were private and not done in professional capacity. 

The head of Octagon's basketball division, former tennis player Jeff Austin, owned $300,000 worth of shares in FTX, as did his wife, fitness influencer, Denise Austin. 

One of Austin's clients if FTX endorser and Golden State Warriors star Steph Curry. In March 2022, he tweeted: 'Do I look like a crypto expert? Thankfully @FTX_Official got me.'  

Curry's friend and the co-founder of the basketball star's media company Unanimous Media, Erick Peyton, was also a shareholder.

Following FTX's collapse and bankruptcy, it's likely that all of the investments made in the crypto exchange have been wiped out. 

The man who had to clean up the mess at Enron says the situation at FTX is even worse, describing what he calls a 'complete failure' of corporate control.

The filing by John Ray III, the new CEO of FTX, laid out a damning description of operations under its founder, from a lack of security controls to business funds being used to buy employees homes and luxuries.

'Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,' Ray said. 

On Thursday, US District Judge Lewis Kaplan on Bankman-Fried's ability to contact employees of companies he once controlled and use encrypted messaging technology while out on bail awaiting trial on fraud charges.

Last week, Bankman-Fried was temporarily barred from contacting any current or former employees of FTX or Alameda Research, his hedge fund, after prosecutors raised concerns that the 30-year-old former billionaire may be trying to witness tamper.

As a condition of his release on $250 million bond, the judge also prevented Bankman-Fried from using messaging apps such as Signal that let users auto-delete messages.

After rejecting an agreement between defense lawyers and prosecutors to loosen those conditions on Tuesday, Kaplan on Thursday said the restrictions would remain in place until Feb. 21 and instructed both sides to explain by Feb. 13 how they could be sure Bankman-Fried would not delete electronic messages.

'I am far less interested in the defendant's convenience' than in preventing possible witness-tampering, Kaplan said at a hearing in Manhattan federal court. 

'There is still snail-mail and there is still email and there are all kinds of ways to communicate that don't present the same risks,' Kaplan added. 

Defense lawyers have argued that Bankman-Fried's efforts to contact an FTX general counsel and John Ray were attempts to offer assistance and not interfere. 

Bankman-Fried, accused by prosecutors of cheating investors and causing billions of dollars in losses, pleaded not guilty on Jan. 3 to eight criminal charges including wire fraud and money laundering conspiracy. 

He faces up to 115 years in prison if convicted, though any sentence would ultimately be determined by a judge based on a range of factors. 

His agreement with prosecutors would have allowed him to use communication tools such as Zoom and texting, as well as WhatsApp if he installed monitoring technology on his phone. 

It also would have exempted some people from the no-contact order, without specifying who they were. 

A prosecutor, Danielle Sassoon, told the judge that the people were connected with FTX but not central to the government case and not expected to testify.

'We don't want to completely eliminate the defendant's ability to communicate,' Sassoon said.

Bankman-Fried had originally proposed being banned from contacting only certain potential witnesses like former Alameda CEO Caroline Ellison and former FTX Chief Technology Officer Zixiao 'Gary' Wang, who have pleaded guilty to fraud and are cooperating with prosecutors. 

Bankman-Fried had also agreed to withdraw his objection to a bail condition preventing him from accessing FTX, Alameda or cryptocurrency assets. 

Bankman-Fried rode a boom in bitcoin and other digital assets to build an estimated $26 billion fortune and become an influential political donor. 

FTX collapsed and filed for bankruptcy in November. Bankman-Fried was extradited from the Bahamas, where he had lived and where the exchange was based, to face the criminal charges. 


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