Taylor Swift Takes Stand Against Shady Crypto Deals, Walks Away From $100M

by Arthur · April 19, 2023

Taylor Swift Takes Stand Against Shady Crypto Deals, Walks Away From 0M

A recent report from Business Insider revealed that Taylor Swift pulled out of a $100 million sponsorship deal with Sam Bankman-Fried and his crypto exchange, FTX. The popular singer was the only celebrity to question the crypto exchange’s compliance with regulations regarding unregistered securities.

The information was revealed by Adam Moskowitz, the attorney handling a class action lawsuit against several FTX promoters, including Shaquille O’Neal, Tom Brady and Larry David. Moskowitz revealed that the plaintiffs are seeking over $5 billion from FTX’s celebrity backers.

The FTX Crypto Debacle continues to reverberate

The complaint against FTX executives, filed by the Securities and Exchange Commission (SEC) in December 2022, alleged that FTX’s cryptocurrency, FTT, was sold as an investment contract and was not properly registered as a security with the SEC. The lawsuit filed by Moskowitz seeks to recover damages for customers who lost money due to investing in FTX.

But while several celebrities supported FTX, Moskowitz revealed that Taylor Swift was the only celebrity to question the crypto exchange’s compliance with regulations regarding unregistered securities. Moskowitz praised Swift for her diligence in reviewing the proposed sponsorship deal and for refusing to compromise on the issue of unregistered securities.

According to the report, the plaintiffs allege that the celebrity backers of FTX misled people by promoting the exchange without disclosing important risks associated with investing in the crypto market. This includes that FTX was not registered with the Securities and Exchange Commission (SEC) and allegedly did not follow regulations regarding unregistered securities.

The terms of the proposed deal included the sale of tickets as non-fungible tokens (NFT), a move deemed risky by FTX’s marketing staff, who believed the deal was too expensive from the start.

Furthermore, Moskowitz added that during discovery, Swift asked FTX to confirm that the proposed securities were not unregistered, demonstrating her understanding of the risks associated with investing in the crypto market.

SEC chief blames bank failure on crypto

Gary Gensler, chairman of the Securities and Exchange Commission, recently made headlines when he spoke before Congress about the failures of three banks: Silvergate Bank, Silicon Valley Bank and Signature Bank. Gensler suggested that the bank’s involvement in the crypto industry may have contributed to their failure during his testimony.

For this, Minnesota Congressman Tom Emmer criticised Gary Gensler for his “regulation by enforcement” approach to digital assets. During a House Financial Services Committee hearing, Emmer accused Gensler of failing to protect investors while pushing valuable financial innovation overseas.

Furthermore, lawyer John Deaton also sparked a debate about classifying tokens as securities in a recent tweet. Deaton argued that the SEC ruling that a token is always a security is an unconstitutional shortcut that avoids the need to perform a Howey analysis, and that WJ Howey himself would never support such a claim.

The Howey test, established by the Supreme Court in 1946, determines whether an investment contract or asset is a security. The test defines an investment contract as a contract, transaction or arrangement in which a person invests money in a joint venture and is led to expect profits solely from the efforts of others.

The debate surrounding the classification of tokens as securities has been going on for years and has significant implications for the crypto industry.

However, it is crucial to recognize that the industry and its various applications offer another solution to the financial crisis that the world has experienced. In this sense, digital assets can be considered a financial haven for investors who can trust that they protect their savings.