Jimmy Butler Binance Suit Joins Brady FTX Deal on Crypto Docket
Miami Heat star Jimmy Butler is the latest prominent athlete to face a lawsuit over his promotion of cryptocurrency.
Last Friday, three Binance customers sued Butler, YouTube influencers Graham Stephan and Ben Armstrong, and Binance CEO Changpeng Zhao in Miami’s federal district court for unauthorized sale of securities, fraud, unfair competition and conspiracy. They want their lawsuit, Sizemore et al. v. Zhao et al., to be certified as a class action on behalf of other Binance customers who bought in after watching celebrities hype crypto assets.
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Binance is the world’s largest exchange, and it features a popular native crypto asset, BNB. Last week the U.S, the Commodity Futures Trading Commission sued Binance over allegations it traded unregistered crypto derivatives. The Justice Department and IRS have also reportedly investigated Binance for potential compliance issues with anti-money-laundering and tax laws.
The complaint contends that Butler has misled the public and his fans by lending his “celebrity and credibility” to Binance’s crypto platform. Last February, for example, Butler published a tweet where he encouraged his followers to “trust” themselves in deciding whether to buy crypto:
Is crypto for you? DO YOUR OWN RESEARCH, trust yourself. ⁰⁰I’m giving away 2222 NFTs of me during the game today 🏈 with @Binance. When a big name tries to sell you crypto, sound the #CyptoCelebAlert buzzer🚨. #ad
⁰Learn more➡️https://t.co/zh3cpqeYF7 pic.twitter.com/fzBdSUGCfW— Jimmy Butler (@JimmyButler) February 13, 2022
Butler, the complaint says, was also paid to appear in advertisements “mocking the celebrity endorsements put out by Binance competitors.” Last fall, Tom Brady, David Ortiz, Naomi Osaka, Shohei Ohtani, Steph Curry and other prominent athletes and celebrities were sued over their promotion of FTX. These athletes have been portrayed as more than mere paid endorsers, since some invested in the cryptocurrency that they hyped. Their larger stake in the cryptocurrency arguably means they held a heightened legal responsibility to accurately promote it.
Case law is mixed on whether athlete endorsers are liable for championing a product or service that is later found to be misleading or illegal.
Nearly 20 years ago, retired MLB star Steve Garvey defeated the Federal Trade Commission in court. The FTC claimed that Garvey bore responsibility for endorsing a weight loss supplement that made exaggerated and fictitious promises. The Ninth Circuit disagreed, finding that Garvey could only be liable if he knew the claims were false. But a few years earlier, retired MLB player Steve Yeager was denied in his motion to dismiss a lawsuit that blamed him for promoting a sports collectibles company that made dubious claims.
U.S. District Judge Roy Altman, a former football and baseball player at Columbia University, has been assigned the case. U.S. Magistrate Judge Lisette Reid will also preside over hearings.
Butler and the other defendants will answer the complaint and seek its dismissal. Expect them to argue that they relied on what they knew and, like other crypto investors, stand to personally lose money if values fall.
