Cryptocurrency exchange FTX struck sponsorship deals with major athletes and sports franchises before filing for Chapter 11 bankruptcy.
The downfall of FTX happened rapidly following the watchdog journalism from the cryptocurrency news site CoinDesk, which published an article on Nov. 2 that uncovered disturbing connections between Sam Bankman-Fried’s FTX crypto exchange and Alameda Research, the cryptocurrency trading firm also founded by Bankman-Fried. CoinDesk unveiled Alameda’s financial balance sheet recorded its largest asset to be roughly $5 billion worth of FTT, the token native to FTX that gives holders a discount on trading fees on its marketplace.
The revelation prompted Changpeng Zhao, the CEO of rival crypto exchange Binance, to announce Nov. 6 on Twitter that he would sell all of Binance’s holdings in FTT. The public then lost faith in FTX, withdrawing about $6 billion in funds from FTX to send the company — which was valued at $32 billion — into a liquidity crisis.
Binance announced Nov. 8 that it reached a nonbinding agreement to buy FTX’s non-U.S. businesses but announced Nov. 9 that it had backed out of the bailout deal. “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” read a statement from Binance. The Wall Street Journal reported on Nov. 9 that the Securities and Exchange Commission and Justice Department are investigating FTX. On Nov. 11, FTX, FTX.US, Alameda Research, and more than 100 affiliates filed for bankruptcy in Delaware.
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“I didn’t ever try to commit fraud on anyone. I was excited about the prospects of FTX a month ago. I saw it as a thriving, growing business,” Bankman-Fried said from the Bahamas on Nov. 30 in a remote video interview during the New York Times DealBook Summit. “What I was nervous about was that basically – and this started, I would say Nov. 2 or so when there was the leak of the Alameda balance sheet through CoinDesk. When I started to think a bit more about this, I was nervous that that would lead to substantial losses for Alameda and that it would be a bit messy. I didn’t think it was existential for FTX. I didn’t think it was going to lead to a massive loss for FTX’s customers.”
Andrew Ross Sorkin, who conducted the recent NYT DealBook interview, read a letter to Bankman-Fried “from a gentleman who said he lost his life savings” in FTX. “Andrew, can you please ask SBF why he decided to steal my life savings and the $10 billion more from customers to give to his hedge fund, Alameda?” the user wrote in the letter ready by Sorkin.
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On Dec. 1, Congress held its first hearing regarding the matter where Rostin Behnam, chairman of the Commodity Futures Trading Commission (CFTC), pushed for industry oversight.
“I strongly believe that we need to move quickly on a thoughtful regulatory approach to establish guardrails in these fast-growing markets of evolving risk,” Behnam said. “Failure to act will leave consumers who have made investments in digital commodities largely unprotected.”
“Unlike other federal financial regulators, the CFTC lacks the necessary and direct authority to write rules and oversee this marketplace. Instead, we may only reach it through more limited authority activated when fraud or manipulation has already occurred. While we can and do hold perpetrators accountable when we find fraud or manipulation, for the victims of the scheme, it’s already too late.”
On Dec. 12, Bankman-Fried was arrested in the Bahamas, where he lives and also where FTX was based, after U.S. prosecutors filed criminal charges. According to the New York Times, the criminal charges against Bankman-Fried include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering. Matthew Goldstein of the New York Times reports that if the some of the charges involve FTT, the SEC could move to regulate crypto and call all tokens securities.
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Tom Brady, Steph Curry, Naomi Osaka, Shohei Ohtani, David Ortiz, Shaquille O’Neal, and Trevor Lawrence are among the star athlete FTX endorsers who have been named in lawsuits against the company. Here is a timeline of the major sports sponsorships signed by FTX:
The Miami Heat and Miami-Dade County signed a 19-year, $135 million deal with FTX to rename the Heat’s venue to FTX Arena. The team was to receive $2 million a year as part of the now-terminated naming rights deal with FTX. Most of the rest — roughly $90 million — was to be paid to the county with the vast majority to be allocated toward fighting gun violence and poverty, according to ESPN.
Esports organization TSM agreed to be paid $210 million by FTX over 10 years in a deal that saw the team compete under the name Team SoloMid FTX. TSM has suspended its deal with FTX and dropped the company’s branding.
MLB signed a reported five-year umpire patch deal with FTX, becoming the first major North American pro sports league to have a league-wide cryptocurrency exchange partner.
Multiple Bitcoin giveaway contests for fans were hosted by MLB and FTX over the course of the deal, which will not continue next season. “Obviously, the FTX development was a little jarring. We have been really careful moving forward in this space,” said MLB commissioner Rob Manfred.
The now-divorced husband-wife duo were announced as FTX shareholders in a long-term deal that saw both appear in several commercials for FTX across social media and TV. “I’m in. Let’s call everyone,” Brady said in one ad spot in which he’s then shown making calls to a Jets fan, dog walker, restaurant worker, surgeon, plumber, among other characters being talked into crypto by the NFL legend.
UC Berkeley signed a 10-year, $17.5 million deal for the Golden Bears’ football stadium to be renamed FTX Field at California Memorial Stadium. That agreement has been suspended and at the time the deal was signed in Aug. 2021, Cal Athletics’ media rights holder Learfield said it agreed to accept the entire payment from FTX in the form of cryptocurrency.
Formula One team Mercedes AMG Petronas signed a multi-year deal to have the crypto brand’s logo appear on its race cars and drivers. Mercedes F1 later said it was launching a “new era of fan collectibles” with FTX in April through commemorative NFT ticket stubs and NFT artwork of cars raced by Lewis Hamilton and George Russell around the Miami Grand Prix. The FTX deal was suspended Nov. 11.
The four-time NBA champion received equity in FTX and became a global ambassador for the firm. “I’m not an expert and I don’t need to be. With FTX, I have everything I need to buy, sell, and trade crypto safely,” Curry said in a March 2022 FTX commercial titled “Stephen Curry is Not a Crypto Expert.”
FTX agreed to pay $10 million to the Warriors for its branding to appear at Chase Center and on regional broadcasts, according to CNBC. FTX became the first international rights partner of the Warriors and the team’s official NFT Marketplace partner. FTX sold NFTs that fans could buy to earn prizes such as NBA Finals tickets, autographed items, Warriors NBA Championship Rings, additional NFTs, and merchandise. The Warriors are now being sued by and FTX customer who accused the team of “fraudulently promoting the now-bankrupt cryptocurrency exchange.”
A multi-year deal saw FTX become the exclusive NFT partner of the NBA’s Washington Wizards, WNBA’s Mystics, and NHL’s Capitals. In Feb. 2022, fans in the DMV-area were encouraged to download the FTX app to sign up for a sweepstakes that would reward them with free NFTs and give more than $40,000 in Bitcoin to select winners. MSE suspended its partnership with FTX on Nov. 18 but said it would continue to host four Wizards fan giveaways sponsored by the crypto company.
FTX U.S. became the presenting sponsor for the Nerd Street Championships and of community events held at Nerd Street’s nine esports facilities across the U.S. This deal came six months after FTX inked a separate seven-year esports sponsorship the League of Legends Championship Series.
Photo credits: Jakub Porzycki/NurPhoto via Getty Images (FTX logo), Joe Raedle/Getty Images (Miami Heat), Mark Cunningham/MLB Photos via Getty Images (umpire patch)
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