The recent bankruptcy of FTX, a once-prominent crypto exchange, has left many in a state of financial distress. While the company is aiming to resume operations in the future, it is now seeking to recover some of the funds it paid to professional athletes and teams who had promoted the exchange. High-profile personalities such as Shaquille O’Neal and Naomi Osaka have been named in this endeavor, however, it is worth noting that Tom Brady has not been mentioned.
FTX’s Rise and Fall
During its peak in the year 2021, FTX struck lucrative deals to acquire the naming rights of arenas and enlisted the endorsement of numerous celebrities and professional athletes. Naturally, these promotional efforts came with a cost. Notable names such as Shaquille O’Neal, Steph Curry, and Naomi Osaka were among those associated with FTX. Interestingly, Tom Brady took a different approach by acquiring an equity stake in the exchange together with his former wife.
The downfall of FTX in late 2022 brought about significant changes for the company, its founders, employees, and the celebrities involved. The collapse resulted in class action lawsuits against FTX, with some of the mentioned personalities finding themselves entangled in legal proceedings.
Under the leadership of CEO John J. Ray III, the new executives at FTX are implementing various strategies to recover the funds owed to the exchange’s multitude of creditors. Meanwhile, the alleged main instigator of the collapse, SBF, awaits trial. As part of these efforts, FTX Group has expressed interest in retrieving the payments made to O’Neal, Osaka, and others for their promotional activities throughout the years.
According to a report from Bloomberg, the company’s hired financial advisors are currently reviewing the possibility of recovering these payments within the context of Chapter 11. Court documents reveal that the exchange referred to these payments as “prepayments related to advertising or sponsorship deals.” This includes approximately $4.9 million disbursed to MLB, which mandated its umpires to wear patches bearing FTX’s logo for a period of time. Furthermore, FTX disclosed a substantial sum of at least $12.2 million related to partnership agreements with Formula 1 racing team Mercedes-AMG Petronas. Payments of $3.4 million to the NBA’s Golden State Warriors and nearly $242,000 to star player Stephen Curry’s business, SC30 Inc., were also disclosed.
The bankruptcy and subsequent attempts by FTX to recover funds from celebrities and athletes have significant implications for all parties involved. For the exchange, these efforts are crucial in alleviating the financial burden imposed by its collapse. However, they may face legal challenges as celebrities and athletes may try to protect the funds they received by citing contractual obligations or questioning the validity of FTX’s claims.
For the celebrities and athletes themselves, the bankruptcy of FTX has tarnished their association with the exchange. They now find themselves entangled in legal proceedings and facing potential reputational damage. Their ability to retain the funds they received will depend on the outcome of the bankruptcy proceedings and the strength of their contractual agreements with FTX.
The bankruptcy of FTX has brought about a series of challenging circumstances for all parties involved. As the exchange battles to salvage some of the funds it paid to celebrities and athletes, the outcome remains uncertain. The resolution of these legal and financial matters will have lasting implications for both FTX and the high-profile personalities associated with the exchange.