People love to make fun of Taylor Swift. Everything from her politics, to her dating life, her songwriting skills, her private jet usage and even her posture. Taylor haters pounce on every little blemish or perceived misstep. Personally, I think Taylor is pretty impressive. She sells out stadiums. She's sold 200 million albums during her career SO FAR. She makes $100 million in an average year. She owns $150 million worth of real estate. Oh, and the 33-year-old's net worth will likely cross the half-billion mark by the end of 2023 thanks to her just-launched world tour that nearly destroyed Ticket Master.
The common thread with these impressive accolades is that, despite only being 33-years-old, Taylor has turned out to be a savvy businesswoman. When evaluating potential business opportunities Taylor asks sophisticated questions. If she doesn't like the answers, she walks away. Even if walking away means leaving an absolutely enormous amount of money on the table.
A few weeks ago we learned that before it collapsed, FTX offered Taylor a $100 million sponsorship deal. And we just learned that in negotiations with the now-disgraced crypto firm, Taylor asked FTX executives one simple, seemingly-obvious question. The answer she got led her to walk away.
Amazingly, none of the dozens of other celebrities who ended up taking FTX's money ever thought to ask this question. Fast forward to the present and all those other celebrities will spend the next year dealing with a $5 billion class action lawsuit… while Taylor crosses the globe on her latest world tour.
(Photo by Octavio Jones/TAS23/Getty Images for for TAS Rights Management)
One Simple Question
In the fall of 2021 Taylor was offered a $100 million sponsorship deal. In an interview this week with a podcast called "The Scoop," one of the lawyers representing the plaintiffs in the $5 billion class action case, described a single question asked by Taylor in her negotiations with FTX executives:
"Can you tell me that these are NOT registered securities?"
FYI, a "security" is any instrument that holds value and can be traded between parties. For example stocks. If you buy one share of Apple stock for $165, you own a piece of paper (that you never actually receive) which says you are entitled to the value that is held by that single share of Apple stock. If the share price goes up, the value held by the stock goes up. And when you're ready to sell the stock, you can trade it to another party directly or through a public market.
Why was Taylor's question so crucial?
In the United States, securities that are offered to the general public must be registered with the Securities and Exchange Commission. Furthermore, selling or promoting unregistered securities to the general public at best is a big no-no, and at worst fraud.
In the $5 billion class action lawsuit, the alleged victims claim the celebrities who promoted FTX "made numerous misrepresentations and omissions" while promoting an unregistered security "in order to induce confidence and to drive consumers to invest in what was ultimately a Ponzi scheme."
It's Hard To Pass Up Millions
You would assume extremely wealthy people like Tom Brady, Gisele Bundchen, Kevin O'Leary, Shaquille O'Neal, Steph Curry and the dozens of other celebrities who accepted enormous paydays to become FTX ambassadors, perform detailed due diligence on the deals they are offered. You would hope that these celebrities (or their representatives) would have known to ask about unregistered securities when evaluating FTX. Apparently they did not.
For example, according to the class action lawsuit, which Shaq did his darndest to avoid, here's the process Shaq allegedly went through before deciding to partner with FTX, according to the lawyer representing the plaintiffs:
"His friend Steph Curry called him, told him he could make millions of dollars if he just served as a FTX Brand Ambassador and lied in a television commercial that he was 'all in' with FTX, when he admitted that personally, he would not go near cryptocurrency."
"Shark Tank" shark Kevin O'Leary is another similar example. And btw, this is a guy who literally became famous by performing due diligence on businesses on a TV show.
Prior to August 2021, Kevin O'Leary had been a vocal critic of crypto currencies. In a January 2021 video published to his own YouTube channel, O'Leary called Bitcoin a "giant nothingburger." A month earlier, in an interview with CNBC, O'Leary warned of a pending regulatory crackdown that would be a major risk for crypto investors:
"Grown men are going to weep when that happens… It will be brutal."
With that level of apocalyptic prophecy about crypto and knowledge of regulatory law, you might be surprised to learn that in August 2021 Kevin changed his tune. He was suddenly "all in" with FTX as the company's latest ambassador. What changed his tune? A $15 million payday.
Tom Brady and his then-wife Gisele Bundchen went "all in" on FTX after receiving a 9-figure equity package.
As if facing a $5 billion class action lawsuit wasn't bad enough, most of the celebrities ended up getting ZERO dollars from their FTX endorsement because most took a large portion of their pay in FTX equity or in the FTT token, both of which are now worthless.
