Shaquille O’Neal to Face Legal Action Over Astrals NFT Project and FTX Involvement

TLDR

  • Shaquille O’Neal faces a class action lawsuit over his involvement in the Astrals NFT project
  • The court dismissed allegations that O’Neal was a “control person” but found he could be considered a “seller”
  • The lawsuit alleges that Astrals sold unregistered securities, which the court did not dismiss
  • O’Neal was also served papers for a separate lawsuit related to FTX’s collapse
  • Process servers had difficulty serving O’Neal for months before finally reaching him at an NBA playoff game

NBA legend Shaquille O’Neal finds himself entangled in legal battles related to his involvement in cryptocurrency and non-fungible token (NFT) projects.

The former basketball star is facing a class action lawsuit over the Astrals NFT project and has also been served papers in connection with the collapse of cryptocurrency exchange FTX.

In a recent development, the U.S. District Court for the Southern District of Florida, Miami Division, has made a mixed ruling on the class action lawsuit against O’Neal concerning the Astrals NFT project.

The court dismissed allegations that O’Neal was a “control person” in the project, meaning someone who exercised actual power or control. However, it found that O’Neal’s involvement could classify him as a “seller” because he successfully solicited the purchase of the products, despite his argument that he was not an officer or director of the company.

The court did not dismiss the allegation that Astrals sold tokens which were unregistered “securities.” This decision could have far-reaching implications for celebrity endorsements of cryptocurrency and NFT projects.

The Astrals project, launched in 2022, involved a collection of 10,000 NFT 3D avatars and a decentralized autonomous organization (DAO) for “incubating innovative projects.”

The lawsuit alleges that O’Neal acted as the face of Astrals, urging investors to “[h]op on the wave before its too late.” Even after the collapse of cryptocurrency exchange FTX in November 2022, O’Neal reportedly sent a message to the community suggesting he was not abandoning the project.

However, the lawsuit claims he subsequently fled, causing the value of Astrals’ financial products to plummet.

Adam Moskowitz, the attorney representing the investors in the lawsuit, suggested that this ruling could bring clarity to other pending crypto class action litigations. Moskowitz, who also represents investors in the FTX, Voyager, and Binance lawsuits, stated,

“We are extremely fortunate that District Judge Moreno authored the first extensive ruling on cryptocurrency and celebrity promotions … bringing clarity and understanding in all of the other crypto class actions litigation, many are pending in this District.”

In a separate but related matter, O’Neal was finally served legal papers for two lawsuits during an NBA playoff game at the Miami sports stadium formerly known as FTX Arena. This came after months of evasion, with process servers attempting to reach him at his homes, studio, and even tossing legal papers at his SUV.

One of these lawsuits is related to the FTX bankruptcy, where O’Neal, along with other celebrities including Tom Brady, is named in a class action complaint. The other lawsuit concerns the Astrals NFT project.

The 54-page complaint against O’Neal for his ownership of Astrals contains six total claims, accusing the former NBA icon of violating laws like Florida’s Deceptive and Unfair Trade Practices Act and the Virginia Consumer Protection Act.

The complaint argues that Astrals NFTs should be considered unregistered securities under the U.S. Securities and Exchange Commission’s Howey Test.

“The fortunes of the Astrals NFT investors, and the value of the Astrals NFTs, were linked almost entirely to O’Neal’s celebrity status and the success of his promotional efforts,” the complaint states.

O’Neal launched the Astrals NFT project in 2022 with his music manager Brian Bayati as CEO and his son Myles O’Neal as the head of investor relations. The project is built on the Solana blockchain and includes a story-driven play-to-earn role-playing game.

O’Neal and the Astral project are expected to respond to the allegations by September 12, 2024. The outcome of these lawsuits could have significant implications for the broader cryptocurrency and NFT industry, particularly regarding celebrity endorsements and the classification of digital assets as securities.

Source: https://blockonomi.com/shaquille-oneal-to-face-legal-action-over-astrals-nft-project-and-ftx-involvement/