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Shaquille O’Neal has been sued again over his cryptocurrency promotions, this time in connection to his Astrals Project.
A proposed class action filed in Florida federal court on Tuesday alleges that O’Neal violated securities laws by selling unregistered Astrals tokens. Investor Daniel Harper claims that the former NBA star “should have known of potential concerns about regulatory issues concerning the sale of unregistered crypto securities” but promoted them anyway to further his crypto empire.
O’Neal is one of several celebrity defendants named in a suit against founder Sam Bankman-Fried and stars who endorsed the platform. He appeared in ads for FTX and has been trying to distance himself from the company by saying in December that he was “just a paid spokesperson.” A dispute has recently emerged in the case over claims that he’s been dodging being served, with lawyers for the investors saying they’ve been trying to give him the papers outside of his home, workplace and car for months. O’Neal has denied the accusations.
In 2022, O’Neal launched the Astrals Project with his music manager, Brian Bayati, as CEO and his son, Myles O’Neal, as the head of investor relations. It aimed to promote investment in a virtual world in which users could socialize with others through unique avatars that could be traded through a marketplace, according to the complaint. Aside from minting and collecting NFTs, investors could also purchase them at an official marketplace for Astrals tokens. Prior to founding the company, O’Neal built his crypto credibility through his involvement in various Ethereum projects, including his own NFT series.
The suit details O’Neal’s promotion of the Astrals Project. In a series of NFTs called the “Shaq Signature Pass,” he touted that “there will only ever be 50 of these in existence” and could only be earned by participating in the community or bidding on Astral tokens.
“The Shaq Signature Pass is the first consumable NFT of its kind, and the signing technology is one that we think will have wide-ranging applications,” the promotion said.
O’Neal repeatedly promoted Astrals NFTs on his various social media accounts, according to the complaint. In one, he urged investors to “hop on the wave before it’s too late.”
The suit also claims O’Neal used the Astrals Project to promote FTX, which he issued to boost his own credibility.
Investors claim that there’s been a “steep drop” in Astrals tokens’ floor price.
The question of whether O’Neal sold unregistered securities will be considered through the Howey Test, a standard that emerged in a 1946 Supreme Court case for determining whether a transaction qualifies as an investment contract. Factors include the investment of money into a common enterprise where there’s an expectation of profits from the efforts of third parties. The suit alleges that Astrals NFTs meet all the criteria to be considered a security.
Responding to criticism within the crypto industry about a lack of regulatory clarity surrounding the issue, Adam Moskowitz, a lawyer for Harper, argues in the complaint that “securities regulation is not meant to be precise but is instead intentionally drafted to be broad and all-encompassing.” He adds, “Clarity is not just uncommon; it is deliberately avoided.”
Moskowitz also represents FTX and Voyager customers in proposed class actions against the crypto exchange firms.
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