Kevin Paffrath, an individual budget YouTuber who runs the Meet Kevin channel and has been included on CNBC's Millennial Cash series, regularly delivers recordings to his 1.4 million devotees about saving tips, travel Visas, and how to oversee land properties.
However, his video titled "Being Sued," which he shared on Thursday, was different.
Paffrath, 31, was responding to a proposed $1 billion class action lawsuit against him and other well-known financial influencers. The lawsuit was filed against Graham Stephan, a former real estate agent who works for Selling Sunset's Oppenheim Group and has 4.25 million subscribers, and Ben Anderson, an Australian influencer who runs the BitBoy Crypto channel, for their roles in promoting the now-defunct crypto giant FTX.
In November, founder Sam Bankman-Fried resigned as CEO after investors rushed to withdraw their funds from FTX out of concern that the company was about to fail. Alameda Research, a crypto hedge fund run by Bankman-Fried, was found to have been receiving customer funds from the cryptocurrency exchange.
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Ed Jones/AFP through Getty Pictures
Previous FTX Chief Sam Bankman-Seared leaves Manhattan government court on Jan. 3.
On December 12, 2022, Bankman-Fried was arrested in the Bahamas, where FTX is based, and on December 21, he was extradited to the United States. He entered a not guilty plea on January 3 to eight charges of defrauding customers, laundering money, and breaking the law regarding campaign finance. As he awaits trial, he is under house arrest at his parents' residence on the Stanford University campus.
Paffrath argues in the video that despite his promotion of the business, he was not liable for any losses.
YouTube.com According to him, "The reality is, people have to put on their big-boy pants and realize that if you make a decision because of something you heard online, that’s your responsibility."
There was a divide of opinion in the comment section. Paffrath was criticized by some commenters, while others praised him for being open. One person wrote, "Content creators should also be more cautious about who they endorse." particularly if it is a paid endorsement."
Paffrath said, "Yup," in a response. Everyone benefits.
The eight YouTubers and the influencer management firm Creators Agency, which had many clients who hyped FTX, are accused of "promoting, assisting in, and/or participating in" the sale of "unregistered securities" by the crypto company, according to the lawsuit, which was filed on Wednesday in the Southern District of Florida. Customers could store their crypto holdings in a high-interest account, according to the filing.
Edwin Garrison, an Oklahoma resident who is also leading a separate class action against celebrities such as Tom Brady and Gisele Bündchen for their roles in advertising FTX, is the lead plaintiff in the case. Joseph Kaye of the Moskowitz Law Firm, Garrison's attorney, previously told BuzzFeed News that his client lost his entire investment while attempting to save money for his granddaughter.
Garrison was joined in the case against the YouTubers by FTX investors from the United Kingdom and Australia. The plaintiffs' attorney, Adam Moskowitz, told BuzzFeed News, "Influencers are paid, just like all other promoters, and as a result, they must be held accountable." They are paid so much because, with the help of social media, they play an important role in making financial decisions.
Several of the YouTubers named in the lawsuit made videos in which they apologized for their roles in promoting FTX after the company's collapse.
I was sponsored by FTX in the past. That, in my opinion, is shameful. Also, it has a scar. And it's bad. Paffrath stated, "Because people got hurt because of that, I would change it if I could go back in time." “On the most basic level, I made the mistake of thinking that Sam Bankman-Fried’s image had anything to do with his credibility,” Stephan said in a video from November.
None of the powerhouses named in the suit answered WEDGEBUZZ News' solicitations for input. However, Anderson, who manages the BitBoy Crypto channel, stated to the media outlet Decrypt that he intends to countersue and that FTX never paid him.
In his video about the lawsuit, Paffrath admits that even though he promoted FTX, he did not lose any money or have any funds in the exchange. However, he mentions that another crypto investment had cost him $420,000.
"I've forever been a devotee that crypto is speculative and shy of guideline," he says, "and assuming that somebody decides to participate in crypto, that is on them." Paffrath has removed his FTX-promoting videos.