Lawrence, Paffrath, and Nash are far from the only people facing class actions over their endorsements of FTX. Tom Brady, Gisele Bundchen, Steph Curry, Shaquille O'Neal, Larry David, are also facing lawsuits over their activities in promoting the firm.
NFL quarterback Trevor Lawrence, others settle FTX class action claims
Jacksonville Jaguars quarterback Trevor Lawrence has agreed to settle claims against him made in a class action lawsuit by FTX customers who say his endorsement of the fallen crypto exchange contributed their decision to use it. Also settling are finance YouTuber and crypto shills Kevin Paffrath and Tom Nash. The terms of the settlements were not disclosed.
SEC charges Mila Kunis-backed Stoner Cats NFT project
In a rather amusing press release, the SEC announced they had charged "Stoner Cats 2 LLC" with conducting an unregistered securities offering when they raised $8.2 million selling NFTs that were intended to finance an animated web series called Stoner Cats.
The series was developed by Mila Kunis and her production company, and she, Ashton Kutcher, and Chris Rock all performed in the show, which ultimately aired six episodes accessible only to those who hold the NFTs. The premise, according to the SEC, is "house cats that become sentient after being exposed to their owner's medical marijuana".
The SEC determined that the project had marketed the NFTs as an investment in a web series enterprise, and had therefore violated securities laws by not registering with the SEC. Stoner Cats 2 LLC agreed to a cease-and-desist order, and will pay a $1 millon penalty.
OneCoin cofounder gets 20 years in prison
Karl Sebastian Greenwood, co-founder of the notorious OneCoin ponzi scheme, was sentenced to 20 years in prison after pleading guilty to fraud and money laundering charges. He will also forfeit $300 million, much of which he spent on real estate, luxury vacations, and a yacht.
OneCoin operated out of Bulgaria, and was founded by Greenwood and "Cryptoqueen" Ruja Ignatova, the latter of whom has been on Europol's most wanted list since May 2022. The fraud amounted to around $4 billion and affected at least 3.5 million victims.
- "Co-Founder Of Multibillion-Dollar Cryptocurrency Scheme “OneCoin” Sentenced To 20 Years In Prison", press release by the U.S. Attorney's Office, Southern District of New York
Developer steals $1 million from the group behind Milady NFTs
A developer working on an NFT project spearheaded by Remilia, the DAO behind the Milady NFT project, stole around $1 million from the group by diverting fees generated by their new Bonkler "experimental finance art project". According to leader Charlotte Fang, the developer "also seized codebases and coordinated with two others on the team in an attempt to seize control of our social media, followed by demands for a significant portion of our treasury, including the NFT reserves." Fang stated that they believed they knew the thief's identity and had filed a lawsuit against them, and promised that they "will now be dealt with through the heavy hand of the law".
Remilia is a very controversial group, particularly after it was exposed that leader Charlotte Fang was a major figure in a white supremacist cult known as Kali Yuga Accelerationism (abbreviated "kaliacc"), and involved in a 4chan suicide cult.
Fang announced the theft on September 11 in a tweet accompanied by a glitch art image derived from a photo of the Twin Towers engulfed in flames and smoke shortly after the 9/11 terrorist attacks.
Founder of the Thodex crypto exchange sentenced to 11,196 years in prison
As of writing, the April 2021 $2 billion Thodex exit scam is the second largest exit scam recorded in the Web3 is Going Great leaderboard. Thodex was one of the largest crypto exchanges in Turkey, until its CEO, Faruk Fatih Özer, disappeared along with $2 billion in customer funds.
He was arrested in August 2022 after a year on the run. Now, he and his brother and sister have all been sentenced to 11,196 years in prison – sentences so over the top that one has to wonder if perhaps Turkish prosecutors are worried the Özers are some kind of crypto-focused vampire crime family. They will also pay a 135 million lira fine (~$5 million).
CFTC goes after three defi projects
The CFTC has announced charges and settlements against defi projects Opyn, ZeroEx, and Deidex for various commodities law violations. The projects will pay $250,000, $200,000, and $100,000, respectively, to settle the charges. They have also agreed to cease and desist the activities.
The CTFC stated: "Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts. They do not."
Fourth FTX exec pleads guilty, agrees to forfeit $1.5 billion
Former CEO of FTX's Bahamian entity, Ryan Salame, has pleaded guilty to two criminal charges in the ongoing case against FTX and founder Sam Bankman-Fried. Salame (pronounced "Salem") is the fourth exec to plead guilty, following pleas from Caroline Ellison and Gary Wang in December 2022, and another from Nishad Singh in February 2023.
As part of the deal, Salame has agreed to forfeit $1.5 billion. He will also pay $5.6 million restitution to FTX debtors and $6 million to the U.S. government, and will forfeit two homes in the Berkshires and a 2021 Porsche 911. According to the New York Times, he is not cooperating with the investigation.
Salame's sentencing is scheduled for March 2024.
Gala Games co-founders sue each other over claimed hundreds of millions in losses
The two co-founders of blockchain gaming company Gala Games are suing each other. One lawsuit, filed by Gala Games CEO Eric Schiermeyer, alleges that Gala's director Wright Thurston stole $130 million in $GALA, directing it through his company and then into a "complex web of obfuscatory transactions" between September 2022 and May 2023. According to the lawsuit, at one point, Thurston explained that he was selling some of the $GALA tokens in order to purchase ammunition for firearms. The lawsuit also outlines how Gala issued the GALA v2 token in May 2023 in order to hide the alleged theft from Gala's token holders.
In a competing lawsuit, Wright Thurston alleges that Schiermeyer unilaterally misused over $600 million in company funds in wasteful actions that were "often for his own personal benefit", including to buy a private jet and hire architects and designers for personal real estate projects.
The $GALA token dropped 5% on the news of the lawsuits.
Impact Theory to pay $6.1 million for unregistered NFT offering in an SEC first
Entertainment company Impact Theory has agreed to a $6.1 million payment to settle charges from the SEC that its sales of its "Founder's Keys" NFTs constituted an unregistered crypto asset securities offering. This is the first time the SEC has taken action against issuers of NFTs as unregistered securities offerings.
As a part of the agreement, Impact will destroy all remaining Founder's Keys NFTs, forgo royalties from future secondary sales, and publish a notice of the order on its websites and social media.
Founder's Keys in the rarest tier have recently sold for $1,500 apiece, and promised to give their holders access to Impact Theory's self-help content, which supposedly taught viewers how to "unlock their potential and pursue greatness". According to the SEC, the company encouraged holders to view the tokens as an investment into the business.
Former New Jersey prison guard charged by SEC over crypto pump-and-dump scheme targeted at cops
John DeSalvo, a former New Jersey corrections officer, was charged by the SEC over a pump-and-dump scheme associated with his "Blazar" token, a project he targeted at fellow law enforcement. With promises that the Blazar token would "guaranteed minimum 100X your money", DeSalvo convinced around 222 investors to pour in at least $623,888. He also made other false statements, including that the token was registered with the SEC, and that he had devised a way for people to take payroll deductions that would automatically be used to purchase the token.
Rather than "100x-ing", the token immediately plummeted when DeSalvo sold his ~41 billion Blazar tokens. DeSalvo is accused of using his profits from the scheme to speculate on other crypto tokens, pay for personal expenses, and reimburse one investor who threatened legal action.
DeSalvo is also being charged over a separate investment scheme he operated, where he solicited investments on Facebook, promising to use his claimed trading expertise to earn massive returns. The SEC alleges he lost most of the money in bad investments, and stole the rest for himself, blaming the losses on market movements.