The The crash of FTX has been swift due to the investigative journalism conducted by CoinDesk, a cryptocurrency news website. On Nov. 2, they revealed disturbing connections between Sam Bankman-Fried’s FTX crypto exchange and Alameda Research, a trading firm Bankman-Fried founded. CoinDesk reported that Alameda’s balance sheet showed their largest asset was around $5 billion worth of FTT, the native FTX token that provides holders with discounts when trading on its platform.
The revelation prompted Changpeng Zhao, the CEO of rival crypto exchange Binance, to tweet on Nov. 6 that he would be selling all of Binance’s holdings in FTT. The public lost faith in FTX and $6 billion was withdrawn from the exchange, leading to a liquidity crisis and valuing the company at $32 billion.
Binance announced on Nov. 8 that it had reached a voluntary agreement to purchase FTX’s businesses outside of the US. This was followed by the announcement on Nov. 9 that they had rescinded their consent to the acquisition agreement. “As a result of corporate due diligence, as well as recent news reports regarding the mishandling of client funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” read Binance’s statement. The Wall Street Journal reported on Nov. 9 that the Securities and Exchange Commission and the Department of Justice were currently investigating FTX. On Nov. 11, FTX, FTX.US, Alameda Research and more than 100 affiliates filed for bankruptcy in Delaware.
SBJ Marketing: Crypto Category Cloudy Condition
“I never intended to commit fraud against anyone. I was optimistic about the prospects for FTX a month ago. I viewed it as a successful and expanding business,” Bankman-Fried stated from the Bahamas during a remote video interview at the New York Times DealBook summit on Nov. 30. “What made me apprehensive was the fact that I had never encountered it before. When the CoinDesk article revealed that the balance sheet had been leaked, I began to think more deeply about it and was worried that it would lead to substantial losses for Alameda. It would be a complicated situation. I didn’t think it was necessary for FTX. It didn’t seem like it would cause a significant loss to FTX clients.”
SBJ Spotlight: Sports Leaders weigh in on the state crypto
Congress held its first hearing on the issue on Dec. 1. CFTC Chairman Rostin Behnam pushed to ensure industry oversight. “We need to take prompt action on a thoughtful regulatory approach to create safeguard in these quickly growing markets of evolving risk. Failure to act will leave those who have invested in digital products largely unprotected,” Behnam said. “Unlike other federal financial regulators, the CFTC does not have the direct authority to write rules and monitor this market. We can only do this through more limited authority activated in cases of fraud or manipulation. When we detect fraud or manipulation, it is already too late for the victims of the scheme.”
Tom Brady, Steph Curry, Naomi Osaka, Shohei Ohtani, David Ortiz, Shaquille O’Neal and Trevor Lawrence are among the star athletes who are named as defendants in lawsuits against FTX sponsors. Below is a timeline showing the major sports sponsorships FTX has undertaken:
April 2021: Miami Heat
The Miami Heat and Miami-Dade County signed a 19-year, $135 million contract with FTX to rebrand the Heat’s home venue to FTX Arena. The team was to receive $2 million annually as part of the now-terminated naming rights deal with FTX. According to ESPN, $90 million of the remaining funds would be donated to the county, to be used mainly to fight poverty and gun violence.
In November 2022, the Miami Heat announced plans to end their partnership with the crypto company, and change the name of FTX Arena back to the original name.
June TSM 2021 Esports
FTX offered Team SoloMid Esports $210 million for a 10-year deal. This allowed them to compete under the TSM name. Team SoloMid later terminated their contract with FTX, and the company’s logo was removed.
June 2021
MLB and FTX have signed a five-year deal for umpire patches. It is the first major North American professional sports league to have a cryptocurrency exchange as a partner.
