Hollywood, sports stars named in FTX suit

A host of Hollywood and sports celebrities including Larry David and Tom Brady have been named as defendants in a class-action lawsuit against cryptocurrency exchange FTX, arguing that their celebrity status made them culpable for promoting the firm's failed business model.

FTX filed for bankruptcy protection in the United States on Friday in the highest-profile crypto blow-up to date after traders pulled $US6 billion ($A8.9 billion) from the platform in three days and rival exchange Binance abandoned a rescue deal.

The Bahamas-based company and its founder, Sam Bankman-Fried, are under investigation by state and federal authorities for allegedly investing depositors' funds in ventures without their approval.

Before its failure, FTX was known to use high-profile Hollywood and sports celebrities to promote its products.

It had the naming rights to a Formula One racing team as well as a sports arena in Miami.

Its advertisements featured Seinfeld creator David, as well as Brady, the star quarterback of the Tampa Bay Buccaneers, basketball players Shaquille O'Neal and Stephen Curry, and tennis star Naomi Osaka.

The lawsuit filed on Tuesday alleges these sports and TV celebrities brought instant credibility to FTX and should be held just as culpable as Bankman-Fried.

"Part of the scheme employed by the FTX Entities involved utilising some of the biggest names in sports and entertainment - like these Defendants - to raise funds and drive American consumers to invest ... pouring billions of dollars into the deceptive FTX platform to keep the whole scheme afloat," the lawsuit says.

Class-action lawyer Adam Moskowitz filed the lawsuit in the Southern District of Florida.

The lawsuit came as crypto lender Genesis Global Capital suspended redemptions citing the failure of FTX, as its sudden collapse ripples across the industry.

A spokesperson for Genesis Global Trading, the parent of Genesis Global Capital, which also offers crypto trading and custody services, said Genesis was working to "shore up the necessary liquidity to meet our lending client obligations", and its trading and custody businesses were unaffected.

AP with Reuters