When cryptocurrency exchange FTX imploded last fall, seven-time Super Bowl winner Tom Brady made an urgent call.
He called Sina Nader, the head of partnerships at FTX. The exchange’s staff were in the midst of a crisis meeting with its ailing founder, Sam Bankman-Fried. Mr. Nader could not answer. “I never thought I’d turn down a call from Tom Brady,” he said.
Mr Brady had cause for concern. As an “ambassador” for FTX, he had appeared at the corporate conference in the Bahamas and in television commercials promoting the exchange as “the most trusted” institution in the loosely regulated cryptocurrency world.
His money was also at stake. FTX had paid him $30 million as part of a endorsement deal signed by Mr. Brady in 2021, a deal made up almost entirely of FTX stock, three people with knowledge of the deal said. According to one respondent, Brady’s then-wife, supermodel Gisele Bundchen, received $18 million in FTX stock.
Now FTX is bankrupt and Mr Bankman-Fried faces fraud charges. Mr Brady, 45, and Ms Bundchen, 42, have been sued by a group of FTX customers to demand compensation from the celebrities who backed the exchange. Additionally, the terms of the deal would have required the former couple, who divorced last year, to pay taxes on at least a portion of their now worthless FTX shares, two people familiar with the endorsement deal said.
Their situation is the most notorious example of a humiliating reckoning with the actors, athletes, and other celebrities who have rushed to embrace the quick bucks and online cryptocurrency hype. During the boom times, Paris Hilton, Snoop Dogg, Reese Witherspoon and Matt Damon gushed about or invested in crypto projects, bringing the strange world of digital currencies to a mainstream audience. It was fun – and lucrative – while prices skyrocketed.
But last year’s crash ended the celebrity crypto bonanza.
In October, the Securities and Exchange Commission fined Kim Kardashian $1.26 million for failing to make adequate disclosures when endorsing crypto token EthereumMax. In December, a California attorney sued two crypto companies, MoonPay and Yuga Labs, accusing them of using a “vast network of world-class musicians, athletes and celebrity clients” to mislead investors about digital assets.
In March, the SEC indicted actress Lindsay Lohan, online influencer Jake Paul, and musicians like Soulja Boy and Lil Yachty for illegally promoting crypto assets. And in late May, after months of failed attempts, a defense attorney turned over court filings to Shaquille O’Neal, the retired basketball star who, according to court filings, was being sued for promoting FTX. Mr. O’Neal was served during the broadcast of a National Basketball Association playoff game.
Representatives for Mr Brady, Mr Bankman-Fried and MoonPay declined to comment. A Yuga Labs spokeswoman said the company “never paid a celebrity to join the club.” Representatives for Ms Bundchen and Mr O’Neal did not respond to requests for comment.
Tech startups and celebrities have long had a symbiotic relationship. The startups offer celebrities the opportunity to make money while staying at the cutting edge of internet culture. The celebrities help young companies gain credibility and reach a larger audience.
Of all the startups that recruited celebrities to endorse crypto, FTX was perhaps the most eager. When Mr. Bankman-Fried was trying to make FTX a household name, he made a list of celebrities who he thought would endorse the company, recalls Mr. Nader, the former FTX executive. Mr. Brady’s name was above.
A former college football player, Mr. Nader was responsible for recruiting Mr. Brady and other stars. In June 2021, Mr. Brady and Ms. Bundchen agreed to a deal with Mr. Bankman-Fried, praising the “revolutionary FTX team.” Mr. Brady seemed genuinely interested in crypto, Mr. Nader said, and had occasional conversations with Mr. Bankman-Fried.
“Imagine a tiger and a lion talking to each other,” said Mr. Nader. “They’re a little different, they do different things, but they’re really impressive in their respective fields.”
In 2021, Mr. Brady also co-founded Autograph, which helps celebrities sell crypto collectibles known as non-fungible tokens, or NFTs. Autograph raised more than $200 million from investors and Mr. Bankman-Fried joined the board.
That same year, Mr. Brady and Ms. Bundchen starred in a $20 million advertising campaign for FTX with commercials running during NFL games. Mr. Brady also posted TikTok videos featuring Mr. Bankman-Fried from FTX’s headquarters in the Bahamas, where he was speaking to hundreds at a conference. Backstage, Mr. Bankman-Fried remarked that he could envision one day buying a football team with Mr. Brady. Ms. Bundchen also appeared at the conference as FTX’s Director of Environmental and Social Initiatives.
When FTX collapsed last November, the company’s $32 billion worth — including Mr Brady’s and Ms Bundchen’s $48 million worth of stock — fell to zero. One of the people said the pair also received a small amount of Ethereum, Bitcoin and Solana tokens to trade on the platform, which disappeared when FTX went bankrupt.
Mr. Brady has not publicly commented on FTX or his relationship with Mr. Bankman-Fried. After FTX’s crisis meeting in November, Mr. Nader called him back.
“He was worried,” said Mr. Nader. “The very first thing he asked me was, ‘Sina, how are you?’ I know you put your heart and soul into it.’”
Ms Bundchen said in an interview with Vanity Fair in March that she “trusted the hype” and felt “blind”.
Mr. Brady’s other crypto company also struggled. Autograph’s revenue fell last year due to the crypto crisis, a person familiar with the company’s finances said. The startup has changed its strategy to focus more on helping celebrities find ways to foster loyalty from their fans and less on marketing crypto tokens to consumers, the person said. The company has also removed some crypto languages from its marketing and downplayed terms like NFT, said another person with knowledge of the company.
Autograph has also fired more than 50 employees in rounds of layoffs, according to a third person. The cuts were previously reported by Insider. An Autograph spokeswoman declined to comment.
Mr Brady has also faced legal troubles. In December, attorney Adam Moskowitz and the law firm Boies Schiller Flexner filed a lawsuit in federal court in Florida, accusing him and Ms. Bundchen of misleading investors. Other defendants include comedian Larry David, NBA star Steph Curry and tennis player Naomi Osaka, all of whom supported FTX.
“None of these defendants performed due diligence prior to marketing these FTX products to the public,” the lawsuit states.
Some celebrities narrowly escaped the crypto chaos. Pop star Katy Perry has had talks to partner with FTX, but they never materialized, according to three people familiar with the situation.
In the spring of last year, Taylor Swift discussed a deal with FTX that could have netted up to $100 million, two people familiar with the matter said. A tour sponsorship was on the table after Ms Swift declined other promotional opportunities, a person with knowledge of the talks said. The Financial Times had previously reported on the size of the deal.
Mr. Moskowitz said on a podcast in April that Ms. Swift conducted due diligence on FTX and asked the exchange to prove that its cryptocurrencies were not unregistered securities. His comments led to a flurry of headlines about Ms Swift’s business acumen. But in an interview with The New York Times, Mr. Moskowitz said he had no inside information about the talks.
In reality, Ms Swift’s side signed the sponsorship agreement with FTX after more than six months of discussions, three people with knowledge of the deal said, and it was Mr Bankman-Fried who walked out. The last-minute reversal left Ms Swift’s team frustrated and disappointed, two of the people said.
A spokeswoman for Ms Swift declined to comment.
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