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Judicial Panel Orders Consolidation Of Lawsuits Against FTX’s Backers And Endorsers

In a small victory to FTX’s victims, the numerous lawsuits against the Bahamas-based bankrupt crypto exchange’s investors and promoters have been consolidated before a single federal judge in Florida, United States. The consolidation came after a judicial panel ordered the creation of a multi-district litigation, something that the plaintiffs had requested last month during a hearing in Philadelphia. 

Multi-District Litigation Against FTX Can Reduce Costs, Fast Track Resolution

According to a report by Bloomberg, a judicial panel ordered the consolidation of the lawsuits against FTX’s financial backers and celebrity endorsers before U.S. District Judge Michael Moore in Miami earlier today. The judicial panel picked Miami for the multi-district litigation, given that it served as the crypto exchange’s headquarters before it filed for Chapter 11 bankruptcy in November last year. 

The numerous lawsuits and class-actions filed against venture capital and private equity firms, including Sequoia Capital and Thoma Bravo have been consolidated. These firms were sued by customers for enabling co-founder Sam Bankman-Fried by investing in his crypto venture. The multi-district litigation also includes the lawsuits filed against the bankrupt crypto exchange’s celebrity promoters, including NFL star Tom Brady, NBA Hall of Famer Shaquille O’Neal, and Shark Tank host Kevin O’Leary. While FTX has been protected from litigation since it filed for Chapter 11 in Delaware, the protection doesn’t extend to third parties that allegedly enabled the exchange’s activities. 

The multi-district litigation is expected to reduce costs associated with the legal proceedings by eliminating duplicative pre-trial document exchanges and providing a venue for test trials to weigh the value of claims. The MDL was requested by lawyers representing the plaintiffs during a hearing last month. The lawyers argued that the sheer amount of lawsuits against FTX-affiliated parties had made the litigation “unwieldy.”. 

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 6/6/2023

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