Fashion

How Tom Brady’s Crypto Ambitions Collided With Reality

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As cryptocurrency exchange FTX imploded last fall, seven-time Super Bowl-winning quarterback Tom Brady made an urgent phone call.

He called Sina Nader, Head of Partnerships at FTX. The exchange’s staff was in the midst of a crisis meeting with its beleaguered founder, Sam Bankman-Fried. Mr. Nader could not answer. “I never thought I’d turn down a call from Tom Brady,” he said.

Mr. Brady had reason to be concerned. As an “ambassador” for FTX, he had appeared at the company’s conference in the Bahamas and in TV commercials promoting the exchange as “the most trusted institution” in the loosely regulated world of crypto. .

His money was also on the line. As part of an endorsement deal that Mr. Brady signed in 2021, FTX paid him $30 million, a deal that consisted almost entirely of FTX stock, three people with knowledge said. the contract. Mr Brady’s wife at the time, model Gisele Bündchen, was paid $18 million in FTX stock, one of the people said.

Now FTX is bankrupt and Mr. Bankman-Fried faces criminal fraud charges. Mr Brady, 45, and Ms Bündchen, 42, have been sued by a group of FTX customers seeking compensation from celebrities who endorsed the swap. 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 stock, two people familiar with said. endorsement agreement.

Their situation is the most publicized example of a humiliating judgment in the face of actors, athletes and other celebrities who have rushed to embrace the easy money and online hype of cryptocurrencies. During boom times, Paris Hilton, Snoop Dogg, Reese Witherspoon, and Matt Damon all sprang or invested in crypto ventures, bringing mainstream audiences into the wonky world of digital currencies. It was fun – and lucrative – as the prices skyrocketed.

But last year’s crash ended the celebrity bonanza.

In October, the Securities and Exchange Commission ordered Kim Kardashian to pay $1.26 million for failing to make adequate disclosures when she approved the EthereumMax crypto token. In December, a California attorney sued two crypto companies, 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 SEC accused actress Lindsay Lohan, online influencer Jake Paul, and musicians including Soulja Boy and Lil Yachty of illegally promoting crypto assets. And in late May, after months of failed attempts, a bailiff delivered court documents to Shaquille O’Neal, the retired basketball star, who was sued for promoting FTX, according to court documents. . Mr. O’Neal was served during the broadcast of a National Basketball Association playoff game.

Representatives for Mr. Brady, Mr. Bankman-Fried and MoonPay declined to comment. A Yuga Labs spokeswoman said the company had “never paid a celebrity to join the club”. Representatives for Ms. Bündchen and Mr. O’Neal did not respond to requests for comment.

Tech start-ups and celebrities have long enjoyed a symbiotic relationship. Startups offer stars a way to make money while staying on top of internet culture; celebrities help start-ups gain credibility and reach a wider audience.

Of all the start-ups that recruited celebrities to endorse crypto, FTX was perhaps the most enthusiastic. As Mr. Bankman-Fried tried to make FTX a household name, he made a list of celebrities he might consider promoting the company, recalled Mr. Nader, the former FTX executive. Mr. Brady’s name was at the top.

A former college football player, Mr. Nader was responsible for recruiting Mr. Brady and other stars. In June 2021, Mr. Brady and Ms. Bündchen reached an agreement with Mr. Bankman-Fried, praising the “revolutionary team FTX”. Mr. Brady seemed genuinely interested in crypto, Mr. Nader said, and occasionally had conversations with Mr. Bankman-Fried.

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

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

That same year, Mr. Brady and Ms. Bündchen starred in a $20 million ad campaign for FTX, with ads running during NFL games. Mr. Brady also posted TikTok videos with Mr. Bankman-Fried from FTX headquarters in the Bahamas, where he spoke at a conference in front of hundreds of people. Behind the scenes, Mr Bankman-Fried remarked that he could imagine one day buying a football team with Mr Brady. Ms. Bündchen also appeared at the conference as FTX’s environmental and social initiatives manager.

When FTX collapsed last November, the company’s $32 billion valuation – including Mr. Brady and Ms. Bündchen’s $48 million in stock – plummeted to zero. The couple had also received a small amount of Ethereum, Bitcoin and Solana tokens to trade on the platform, said one of the people, who disappeared in the bankruptcy of FTX.

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

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

Ms Bündchen said in a March interview with Vanity Fair that she had “trusted the hype” and felt “blindsided”.

Mr. Brady’s other crypto business has also struggled. Autograph’s revenue plummeted last year amid the crypto meltdown, a person familiar with its finances said. The startup has shifted its strategy to focus more on helping celebrities find ways to build fan loyalty, and less on marketing crypto tokens to consumers, the person said. The company has also removed some cryptographic languages ​​from its marketing, downplaying terms such as NFT, another person with knowledge of the company said.

Autograph also laid off more than 50 employees in a round of layoffs, a third person said. The cuts were reported earlier by Insider. A spokeswoman for Autograph declined to comment.

Mr Brady has also encountered legal problems. In December, Adam Moskowitz and the law firm Boies Schiller Flexner filed a lawsuit in federal court in Florida, accusing him and Ms Bündchen of misleading investors. Other defendants include comedian Larry David, NBA star Steph Curry and tennis player Naomi Osaka, all of whom have supported FTX.

“Neither of these defendants performed due diligence before marketing these FTX products to the public,” the lawsuit states.

Some celebrities have narrowly escaped the crypto mess. Pop star Katy Perry held talks about a partnership with FTX that never materialized, three people familiar with the situation have said.

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

Mr. Moskowitz, the attorney suing the celebrities, said in a podcast in April that Ms. Swift did due diligence on FTX, asking the exchange to prove that her cryptocurrencies were not unregistered securities. . His comments made headlines about Ms 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 reality, Ms Swift’s team signed the sponsorship deal with FTX after more than six months of talks, three people familiar with the deal said, and it was Mr Bankman-Fried who signed on. took of. The last-minute reversal left Ms Swift’s team frustrated and disappointed, two of the people said.

A spokeswoman for Ms Swift declined to comment.

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