Gisele and Tom Brady lost BRL 232 million with the collapse of FTX – 07/07/2023 – Market

When cryptocurrency exchange FTX imploded late last year, Tom Brady, the seven-time Super Bowl winning quarterback, made an urgent phone call.

He called Sina Nader, head of partnerships at FTX. The exchange’s staff was in the middle of a crisis management meeting with its cornered founder, Sam Bankman-Fried. Nader couldn’t answer. “I never thought I’d turn down a call from Tom Brady,” he said.

Brady had reason to be concerned. As an “ambassador” for FTX, he has appeared at the company’s conference in the Bahamas and in TV commercials that promoted the exchange as the “most trusted” institution in the loosely regulated world of cryptocurrencies.

His money was also at stake. As part of an endorsement deal Brady signed in 2021, FTX paid him $30 million, a deal that consisted almost entirely of stock in the company, said three people with knowledge of the deal. Brady’s wife at the time, supermodel Gisele Bündchen, received $18 million in FTX stock, one of the people said.

Now FTX is bankrupt and Bankman-Fried faces criminal fraud charges. Brady, 45, and Bündchen, 42, were sued by a group of FTX clients seeking compensation from celebrities who endorsed the exchange.

What’s more, the terms of the deal would require the former couple, who divorced last year, to pay taxes on at least some of their now worthless FTX shares, said two people familiar with the endorsement deal.

Their plight is the highest-profile example of a humiliating reckoning faced by actors, athletes and other celebrities who rushed to embrace the easy money and online hype of cryptocurrencies.

In the boom times, Paris Hilton, Snoop Dogg, Reese Witherspoon and Matt Damon were excited or invested in crypto projects, bringing a mainstream audience into the volatile world of digital currencies. It was fun — and profitable — as prices soared.

But last year’s crash ended the celebrity crypto bonanza.

In October, the US Securities and Exchange Commission (SEC) ordered Kim Kardashian to pay $1.26 million for failing to make adequate disclosures when endorsing the EthereumMax token. In December, a lawyer in California sued two crypto companies, MoonPay and Yuga Labs, accusing them of using a “vast network of famous musicians, athletes and clients” to mislead investors about digital assets.

In March, the SEC charged actress Lindsay Lohan, online influencer Jake Paul and musicians like Soulja Boy and Lil Yachty with illegally promoting crypto assets. And in late May, after months of unsuccessful attempts, a court official served subpoenas to Shaquille O’Neal, the retired basketball star, who was sued for promoting FTX, according to legal documents. O’Neal was notified during the broadcast of a National Basketball Association (NBA) playoff game.

Representatives for Brady, Bankman-Fried and MoonPay declined to comment. A spokesperson for Yuga Labs said the company had “never paid a celebrity to join the club”. Representatives for Bündchen and O’Neal did not respond to requests for comment.

Tech startups and celebrities have long had a symbiotic relationship. Startups offer stars a way to make money while staying at the forefront of internet culture; celebrities help young companies gain credibility and reach a wider audience.

Of all the startups that recruited celebrities to promote cryptocurrencies, FTX was perhaps the most eager. As Bankman-Fried tried to make FTX a household name, he made a list of celebrities he could imagine promoting the company, recalled Nader, the former FTX executive. Brady’s name was at the top.

A former college football player, Nader was tasked with recruiting Brady and other stars. In June 2021, Brady and Bundchen struck a deal with Bankman-Fried, praising “FTX’s game-changing team”. Brady seemed genuinely interested in cryptocurrencies, Nader said, and occasionally chatted with Bankman-Fried.

“Imagine a tiger and a lion talking,” Nader said. “They’re a little different, they do different things, but they’re really formidable in their own arenas.”

In 2021, Brady also co-founded Autograph, which helps famous people sell collectible cryptos, NFTs. Autograph raised over $200 million from investors, and Bankman-Fried joined the board.

In the same year, Brady and Bündchen starred in a $20 million advertising campaign for FTX, with commercials running during National Football League (NFL) games. Brady also posted TikTok videos with Bankman-Fried at FTX headquarters in the Bahamas, where he spoke at a conference in front of hundreds of people.

Backstage, Bankman-Fried commented that he could imagine buying a football team someday with Brady. Bundchen also appeared at the conference as FTX’s head of environmental and social initiatives.

When FTX collapsed last November, the company’s $32 billion valuation – including the $48 million worth of Brady and Bündchen shares (about R$232 million at current exchange rates) – plummeted to zero. The couple was also given a small amount of ethereum, bitcoin and solana tokens to trade on the platform, said one of the people, who disappeared in the FTX bankruptcy.

Brady has not publicly commented on FTX or his relationship with Bankman-Fried. After the November FTX crisis meeting, Nader called back.

“He was worried,” Nader said. “The first thing he asked me was, ‘Sina, how are you? I know you put your heart and soul into this.’

Bundchen said in a March interview with Vanity Fair magazine that she “trusted the hype” and felt “taken aback”.

Brady’s other venture involving crypto has also struggled. Autograph’s revenue dipped last year amid the cryptocurrency meltdown, said a person familiar with its finances.

The startup has shifted its strategy to focus more on helping celebrities find ways to foster their fans’ loyalty and less on marketing crypto-tokens to consumers, the person said. The company has also removed some cryptographic language from its marketing, downplaying terms like NFT, another person with knowledge of the company said.

Autograph has also cut more than 50 employees in rounds of layoffs, a third person said. The reductions were previously reported by Insider. An Autograph spokesman declined to comment.

Brady also faced legal problems. In December, Adam Moskowitz and law firm Boies Schiller Flexner filed a lawsuit in Florida federal court accusing him and Bundchen of deceiving investors. Other defendants include comedian Larry David, NBA star Steph Curry and tennis star Naomi Osaka, all for endorsing FTX.

“None of these defendants performed any due diligence before marketing these FTX products to the public,” the suit said.

Some celebrities narrowly escaped the cryptocurrency mess. Katy Perry, the pop star, had talks about a partnership with FTX that didn’t materialize, three people familiar with the situation said.

Translated by Luiz Roberto M. Gonçalves