Not only did the fall of FTX affect cryptocurrencies, but it is now wreaking havoc in the world of sports.
Key Details
- FTX, one of the giants in the world of cryptocurrency, has recently taken a tumble for the worst—losing billions of customer assets.
- The company spent millions of dollars on sports partnerships and after the collapse hundreds of millions of dollars worth of sports sponsorships are being questioned.
- Now not only is FTX in hot water for the nearly $10 billion loss of customer money, but now hundreds of millions in sports sponsorships.
Why it’s news
FTX was one of the top crypto exchange companies before taking a huge fall earlier this week.
The fall of the major crypto company took its toll on cryptocurrencies causing many coins to plummet in value after the failure brought fear to the sector causing many holders to sell their assets.
Not only has the company’s fall from grace affected cryptocurrencies but not the shock wave is hitting the world of sports.
FTX had been popping up everywhere in sports from stadiums being named after the companies to race cars with the logo on it. Now the future of these deals are in question as FTX does not have the money to continue them.
If the company misses payments, teams and organizations may try to get their money through litigation and look for a different sponsor, says Georgetown University professor of sports management Marty Conway.
Last year, FTX bought the naming rights for the Miami Heat’s arena. The company signed a 19-year deal with the team and Miami-Dade County for $135 million.
“Should FTX be unable to meet their financial obligations under the naming rights deal,” says spokesman for the mayor’s office in Miami-Dade County Natalia Jaramillo. “the county will explore all legal remedies.”
It is unclear what will come of the situation as of now, but what is clear is that FTX is in a very sticky situation.
The crypto company secured other sports deals including a deal with Major League Baseball (MLB) to put the FTX logo on the jersey of every umpire, another sponsorship with The Golden State Warriors and Mercedes-AMG Petronas F1 racing team. The company also scored brand ambassador sponsorships with football star Tom Brady and ex-wife Gisele Bündchen as well as MLB star Shohei Otani and basketball star Steph Curry.
Backing up a Bit
FTX had a huge tumble. The exchange was showing no signs of trouble before the huge fall earlier this week, which was a huge shock to the crypto world.
Many were unsure as to what happened to FTX, but it seems the company took some risky bets that didn’t turn out to be good moves.
FTX has an affiliated trading firm called Alameda Research and FTX lent billions of dollars worth of customer assets to fund risky bets led by the firm, according to people familiar with the matter.FTX CEO Sam Bankman-Fried says Alameda owes the company about $10 billion that it lent to fund its bets. The bad thing is the money that FTX lent to Alameda was customer’s money that they had put into accounts for trading ultimately leading to the fall of FTX.