On November 11, FTX Trading, a crypto asset (virtual currency) exchange that reportedly had over 1 million customers, filed for bankruptcy in the United States and went out of business. The total debt is said to be up to 7 trillion yen ($50 billion) in Japanese yen.
The bankruptcy unexpectedly sparked lawsuits by 11 celebrities, including women’s tennis player Naomi Osaka and Shohei Ohtani of the Angels, who had been billboards for FTX, along with the company’s founder Sam Bankman-Fried, and other victims’ groups.
The detailed amount of damages claimed is unknown, but it is said to be in the billions of dollars, which simply means that each of them is being sued for damages of several hundred million dollars, or tens of billions of Japanese yen. Do they really have to pay?
Atsushi Kajioka, an attorney who has handled numerous lawsuits in California in the 27 years since he opened his office there, explains.
“There is little likelihood that they will have to pay, because they probably had no idea what kind of fraudulent scheme FTX was running,” he said. And even if one of the accused celebrities did understand how the scheme worked, which seems unlikely, they would still have to prove that they intentionally participated in the fraudulent activity to defraud consumers. That would be difficult to prove.
If they lose this trial, all the celebrities will be too scared to appear in commercials. The lawyers for the suing parties know that they don’t know anything about this.
So why go to court? In fact, in the U.S., which is a litigation powerhouse, there are many cases where the defendant feels that a trial is too much trouble and pays a settlement.
When you are sued, you have to pay attorney’s fees, you have to be summoned to court for some reason, and it takes a long time. In the U.S., it is common to settle out of court quickly, considering the hassle and expense involved. There are many people who settle out of court by paying a certain amount of money, even if they are not satisfied with the reason why they were sued. Settling simply means having the charges dropped and, of course, not admitting any guilt.
“In the U.S., it is a common practice to sue people with money for this kind of financial trouble. There is little hope of getting money out of a bankrupt company or Mr. Bankman-Fried. So, they are trying to recover as much money as possible by suing people who have money. Therefore, the majority of lawyers in the U.S. view this lawsuit with a cold shoulder,” said Kajioka.
It is reported that Otani and Osaka received their compensation from FTX in virtual currency. Not only did the virtual currency plummet and become as good as scrap paper, but the two were also hit with a lawsuit, apparently in pursuit of a settlement payment. The two may be the biggest victims of the FTX.