How much heat will Brady face in FTX lawsuit?

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Sports

Nearly three months ago, when Tom Brady left the Tampa Bay Buccaneers in the middle of training camp — to “deal with some personal things,” according to head coach Todd Bowles — a quest to unravel the sudden departure began. Nobody had ever seen an absence like this from a player of Brady’s stature, which was framed in vague terms.

He was taking time off. It was personal. The team was OK with it. End of story.

Of course, it wasn’t the end of the story. There was more to come.

An element of layering that first started with rumors of a brewing divorce from his wife, Gisele Bündchen, accompanied by an onslaught of anonymous details about the struggles the two had been facing in their relationship. Eventually, the coverage of that marital unraveling became the backdrop for Brady’s 11-day training camp absence from the Buccaneers.

While the details were murky at best, a multitude of competing reports claimed to have pinned down one thing: For at least part of Brady’s sudden sabbatical, he allegedly went to the Bahamas to spend time with his kids at an exclusive resort. Finally, there was an alleged silhouette for Brady’s absence in August. It was family time for the quarterback, who was roughly two months from finalizing his divorce from Bündchen.

Brady never confirmed or denied any of these reports. He really never expounded on that period of time at all. That might change in the wake of a class-action lawsuit brought against bankrupt trading platform FTX this week, which named Brady and a handful of other athlete/entertainer “brand ambassadors” (including Bündchen) as defendants. All of them accused in the lawsuit as having played a part in an alleged fraud “[t]o raise funds and drive American consumers to invest in the [securities] … pouring billions of dollars into the deceptive FTX platform to keep the whole scheme afloat.”

This is a serious allegation made in the kind of class-action litigation that — if it actually makes it into a courtroom — usually spends months, if not years, combing through the lives of the defendants.

So what does this have to do with Brady and that 11-day absence from the Buccaneers? Well, a few things are at a remarkable crossroads of coincidence.

Tom Brady being named a defendant in the lawsuit against FTX might cast his puzzling 11-day training camp absence in a whole new light. (Kim Klement-USA TODAY Sports)
Tom Brady being named a defendant in the lawsuit against FTX might cast his puzzling 11-day training camp absence in a whole new light. (Kim Klement-USA TODAY Sports)

First, everyone must understand that Brady is arguably the most famous endorsement “face” tied to the FTX platform, which is headquartered in the Bahamas. He did a multitude of highly publicized commercials for the company and repeatedly utilized his social media platforms to endorse cryptocurrency, FTX and founder Sam Bankman-Fried. Those efforts included several points of collaborative work, from being one of the speakers (along with Bündchen) at Bankman-Fried’s “Crypto Bahamas” event last April, to hosting a Twitter Spaces with the FTX founder in June of 2021.

In exchange for his work and endorsement of the company and Bankman-Fried, Brady reportedly received equity in FTX. To date, there has never been a precise accounting of what Brady’s alleged stake in FTX totaled, or whether he also invested his own personal finances in the platform. But what’s clear is that Brady had a financial interest in FTX when it collapsed under the specter of bankruptcy and fraud. It’s a stunning development that has now seen the star quarterback scrub his endorsements of FTX, crypto and Bankman-Fried in the wake of shockwaves sent through the financial sector and a mounting fraud investigation.

But back to that 11-day window: Consider two seemingly significant events tied to FTX around that same time on the calendar. Brady left the Buccaneers on Aug. 11 and returned Aug. 22. During that time, arguably the first significant and public red flag regarding FTX emerged, when the FDIC (Federal Deposit Insurance Corporation) issued a cease-and-desist letter accusing a handful of crypto platforms of lying to customers about their deposits being insured by the government. FTX, operating out of the Bahamas, was far and away the largest crypto platform to be accused by the FDIC of lying about insured deposits.

According to the letter’s press release: “Based upon evidence collected by the FDIC, each of these companies made false representations — including on their websites and social media accounts — stating or suggesting that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured.” The letter resulted in a ripple of raised eyebrows across social media that wondered aloud about FTX’s business practices if it had indeed lied about customer deposits being insured.

In another remarkable coincidence, less than a week after the letter was sent, the co-CEO of Alameda Research, a crypto trading firm also founded by Bankman-Fried and also operating out of the Bahamas, unexpectedly stepped down. That co-CEO, 30-year-old Sam Trabucco, cited a need “to relax” in his decision. The significance of this? We’re now learning that by the time FTX had collapsed, Alameda Research had allegedly played a significant role in the implosion, with Bankman-Fried reportedly transferring $10 billion of customer funds from FTX to Alameda Research to keep it afloat.

What does this have to do with Brady? Quite possibly nothing, apart from the fact that if he ever faces a deposition, he will likely be asked a few things surrounding that 11-day window he took away from training camp. Questions such as:

  • Did he visit the Bahamas, as reported?

  • Was the “exclusive resort” that he reportedly stayed in the same one housing executives from FTX and Alameda Research?

  • Did Brady have any contact with anyone from the two companies while he was allegedly in the Bahamas?

  • As a reported equity-holder in FTX, what did he know about the FDIC letter regarding customer deposits or the ties between FTX and Alameda Research?

  • When did Brady first find out that FTX was in financial trouble?

  • As one of the most prominent endorsers and faces of FTX, did Brady lose everything invested, or was he able to move funds out before it declared bankruptcy?

In essence, the root question will be whether or not Brady was a victim of FTX like everyone else, or whether he had knowledge or culpability in what ultimately went down. That will likely be the same question facing all of the big-name endorsers who stood behind a business that appears to have gone horribly wrong. Most of whom are now being sued, and most of whom will have to explain the same thing Brady will if this gets deep into litigation.

What did you know about the FTX collapse and when did you know it? With billions of losses at stake, the answer to that is going to be a fascinating story in sports, entertainment and finance for years to come.

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