FTX Advisers Investigating Recovery of Payments to Sports Stars for Partnerships and Endorsements
FTXโs financial advisers, Alvarez & Marsal, are conducting an investigation into the likelihoodย of recovering funds that the exchange paid to celebrity athletes, including Naomi Osaka and Shaquille OโNeal, for partnerships and endorsements. The aim is to use these recovered funds to offset states made by FTXโs customers and creditors following its bankruptcy filing in November 2022.
In court filings, FTX disclosed that it reviewed payments made to individual athletes, Major League Baseball (MLB), and Formula 1 racing teams to determine if they mayย be reversed under Chapter 11 regulations. FTX had used its association with sports stars and leagues to strengthen its reputation, paying $4.9 Million to MLB and $12.2 Million to Formula 1 before filing for bankruptcy.
The advisers believe that a portion of the Formula 1 payment mayย be recovered through Chapter 11 regulations. Other athletes who received payments from FTX include Trevor Lawrence and David Ortiz.
Hot Take:
FTXโs move to investigate the recovery of funds paid to sports stars for partnerships and endorsements outlines the complexities faced when a cryptocurrency exchange faces financial turmoil. Althoughย while such partnerships can bring visibility and legitimacy to the platform, they can likewise complicate matters during bankruptcy proceedings. This case serves as a reminder that enterprises in the cryptocurrency space must carefully manage their financials and contractual obligations to protect all parties involved.
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