FTX Investors Sue Bankman-Fried Over Yield-Bearing Crypto Accounts (Report)

FTX investors have sued the company’s ex-CEO Sam Bankman-Fried for illegally offering yield-bearing crypto accounts at the now insolvent exchange.

The lawsuit, filed in Miami on Tuesday, alleges that FTX’s crypto-yield-bearing accounts were unregistered securities illegally sold in the U.S, according to Reuters.
Now that the exchange has failed to honor withdrawals, investors claim to have sustained $11 billion in damages.
The lawsuit also seeks damages from numerous celebrities who were involved with promoting FTX, such as Tennis Star Naomi Osaka and NFL quarterback Tom Brady. Many high-profile athletes and teams have been rushing to cut ties with the firm over the past week, including the Golden State Warriors.
Multiple crypto lenders have been targeted by state securities regulators this year for offering unregistered crypto yield products, including Nexo. The Securities and Exchange Commission (SEC) stopped Coinbase from listing a similar product in September 2021.
SEC Chairman Gary Gensler has expressed suspicion over the unusually high yields such crypto accounts frequently offer. “How does somebody offer (such a large percentage of returns) in the market today and not give a lot of disclosure?” he asked at the RFK Human Rights Compass Summer Investors Conference in June.
The SEC and CFTC are reportedly investigating FTX for suspected embezzlement of $10 billion in client assets to SBF’s trading company Alameda Research.
Bankman-Fried is now seeking billions from investors to help plug an $8 billion hole in its balance sheet.