How Tom Brady’s crypto ambitions collided with reality

With the collapse of cryptocurrency exchange FTX last fall, seven-time Super Bowl winning quarterback Tom Brady made an urgent phone call.

Contact Sina Nader, Head of Partnerships at FTX. The exchange’s employees were in the midst of a crisis meeting with its embattled founder, Sam Bankman-Fried. Mr. Nader could not answer. “I never expected to turn down a call from Tom Brady,” he said.

Mr. Brady has cause for concern. As an “ambassador” for FTX, he has appeared at the company’s convention in the Bahamas and on television Commercials which promoted the exchange on behalf of “most trusted” An institution in the unregulated world of crypto.

His money was also at stake. as part of support The agreement Mr. Brady signed in 2021 had FTX paying him $30 million, a deal that consisted almost entirely of FTX stock, three people familiar with the contract said. One person said that Mr. Brady’s wife at the time, model Gisele Bundchen, received $18 million in FTX shares.

Now FTX is bankrupt, and Mr. Bankman-Fried is facing criminal charges of fraud. Mr Brady, 45, and Ms Bundchen, 42, have been sued by a group of FTX clients demanding compensation from celebrities who endorsed the exchange. On top of all that, the terms of the deal would have required the former couple, who divorced last year, to pay taxes on at least some of their now worthless FTX shares, two people familiar with the endorsement deal said.

Their situation is the prime example of the humiliating expense facing actors, athletes, and other celebrities who have been quick to embrace the easy money and online hype of cryptocurrencies. During boom times, Paris Hilton, Snoop Dogg, Reese Witherspoon, and Matt Damon have all plunged into or invested in crypto projects, bringing the mainstream audience into the shaky world of digital currencies. It was fun – and profitable – while prices went up.

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

In October, the Securities and Exchange Commission ordered Kim Kardashian to pay $1.26 million for failing to provide sufficient disclosures when she endorsed crypto token EthereumMax. In December, a California lawyer sued two crypto firms, MoonPay and Yuga Labs, accusing them of using “a vast network of musicians, athletes, and celebrity clients” to mislead investors about digital assets.

In March, the Securities and Exchange Commission charged actress Lindsay Lohan, internet influencer Jake Paul and musicians including Soulja Boy and Lil Yachty with illegally promoting crypto assets. And in late May, after months of failed attempts, the operation server Handing over court papers To Shaquille O’Neal, the retired basketball star, who has been sued for promoting FTX, according to legal filings. Mr. O’Neal is introduced during a broadcast from a National Basketball Association playoff game.

Representatives for Mr Brady, Bankman Fried and Moon Bay declined to comment. A spokeswoman for Yuga Labs said the company has “never paid a celebrity to join the club”. Representatives for Ms. Bundchen and Mr. O’Neill did not respond to requests for comment.

Tech startups and celebrities have always had a symbiotic relationship. Startups offer stars a way to make money while staying on the cutting edge of internet culture; Celebrities help young companies gain credibility and reach a larger audience.

Of all the startups that have recruited celebrities to endorse cryptocurrencies, FTX is perhaps the most enthusiastic. When Mr. Bankman-Fred tried to turn FTX into a household name, he made a list of celebrities he could envision promoting the company, recalls Mr. Nader, the former FTX CEO. Mr. Brady’s name was at the top.

Mr. Nadir, a former college football player, was responsible for recruiting Mr. Brady and other stars. In June 2021, Mr. Brady and Ms. Bundchen He agreed to a deal With Mr. Bankman Fried, they hail their “Revolutionary FTX Team”. Mr. Nader said Mr. Brady seemed genuinely interested in cryptocurrency, and he occasionally had conversations with Mr. Bankman Fried.

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

In 2021, Mr. Brady also co-founded Autograph, which helps celebrities sell cryptocurrency holdings known as non-fungible tokens, or NFTs. Autograph has raised over $200 million from investors, and Mr. Bankman Fried has joined the board.

In the same year, Mr. Brady and Mrs. Bundchen starred in a $20 million ad campaign for FTX, with commercials played during NFL games. Mr. Brady also posted TikTok videos With Mr. Bankman Fried from FTX headquarters in the Bahamas, speaking at a conference in front of hundreds. Behind the scenes, Mr. Bankman-Fred remarks that he can imagine buying a football team someday with Mr. Brady. Ms. Bündchen also appeared at the conference as Head of Environmental and Social Initiatives at FTX.

When FTX collapsed last November, the company’s $32 billion valuation — including Mr. Brady and Ms. Bundchen’s $48 million in shares — dropped to zero. One person said that the pair also received a small amount of Ethereum, Bitcoin and Solana for trading on the platform, which disappeared in the FTX bankruptcy.

Mr. Brady has not commented publicly on FTX or his relationship with Mr. Bankman-Fried. After an FTX crisis meeting in November, Nader contacted him.

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

Ms Bündchen said in March interview with Vanity Fair that she “trusted the hype” and was “shocked”.

Mr. Brady’s other encryption project has also suffered. A person familiar with its finances said that Autograph’s revenue plummeted last year amid the cryptocurrency crash. The person said the startup has changed its strategy to focus more on helping celebrities find ways to build loyalty with their fans, and less on marketing crypto-tokens to consumers. The company has also removed some cryptographic language from its marketing, downplaying terms like NFT, another person familiar with the company said.

A third person said Autograph has also cut more than 50 employees in rounds of layoffs. Cuts have been reported earlier by inside. An Autograph spokeswoman declined to comment.

Mr. Brady also ran into legal trouble. In December, attorney Adam Moskowitz and the law firm Boise Schiller Flexner filed a lawsuit in Florida federal court accusing him and Ms. Bundchen of misleading investors. Other defendants include comedian Larry David, NBA star Steve Curry and tennis player Naomi Osaka, all of whom supported FTX.

“None of these defendants conducted any due diligence prior to marketing FTX products to the public,” the lawsuit said.

Some celebrities have narrowly escaped the crypto chaos. Three people familiar with the situation said Katy Perry, the pop star, had talks about a partnership with FTX that never came to fruition.

In the spring of last year, Taylor Swift discussed a deal with FTX that could have paid up to $100 million, two people familiar with the matter said. A person familiar with the talks said tour sponsorship was on the table after Ms. Swift declined other promotional options. The deal size has been reported earlier by Financial Times.

Mr. Moskowitz he said on a podcast In April, Ms. Swift did its due diligence on FTX, asking the exchange to prove that its cryptocurrency is not an unregistered security. his comments led to a flurry of headlines About Mrs. 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 fact, Ms. Swift’s side signed the sponsorship agreement with FTX after more than six months of discussions, three people familiar with the deal said, and Mr. Bankman-Fried pulled out. A couple of people said the last-minute reversal left Ms. Swift’s team frustrated and disappointed.

A spokeswoman for Ms Swift declined to comment.