New lawsuit accuses social media, YouTube influencers of hyping FTX without proper disclosure

A lawsuit filed Wednesday named a group of social media influencers and claimed they “actively promoted FTX” to their millions of followers” without disclosing the nature of any payments or compensation.

Among the influencers are Erika Kullberg, Ben Armstrong — also known as BitBoy in crypto circles — and Kevin Paffrath,  or “Meet Kevin” on YouTube.

The lawsuit alleges that some of the creators, namely Paffrath as well as Graham Stephan and Tom Nash, “have now scrubbed their YouTube channels of all video clips endorsing FTX and praising Sam Bankman-Fried.”

In place of that, the lawsuit says creators posted apologetic messages about their representation of the crypto exchange, which is facing investigations from regulators in the U.S. and abroad and could owe as much as $3.1 billion to its top 50 creditors.

“Yes, I used to be sponsored by FTX. I think that is a disgrace. And it’s a scar. And it sucks. If I could go back I would change it, because people got hurt because of that. I feel so terribly about that. People got hurt because of FTX and it’s a disgrace,” Paffrath said in a Youtube video dated Nov. 22, according to the lawsuit.

Class-action status

The lawsuit is seeking class-action status and includes both U.S. and non-U.S.-based plaintiffs.

Representing the plaintiffs is Adam Moskowitz of the Moskowitz Law Firm, who was also involved in a separate FTX-related lawsuit blaming Tom Brady, Gisele Bündchen and other celebrities for promoting FTX.

“Though FTX paid Defendants handsomely to push its brand and encourage their followers to invest, Defendants did not disclose the nature and scope of their sponsorships and/or endorsement deals, payments and compensation,” the lawsuit claims. “This action may be one of the only avenues for any of the victims to recover any of their damages.”

(With additional reporting assistance from Benjamin Robertson.)

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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